August 20 saw SBA release its proposed rule to adjust its small business size standards, which are housed at 13 C.F.R. § 121.2o1. If you were expecting slight increases (and maybe some decreases) across the board, then you’re in for a surprise.

SBA overhauled its methodology for determining size standards to more closely align with the the Small Business Act’s language requiring a small business to be one which is “not dominant in its field of operations.” This new focus produces a very different picture of what it means to be a small business in many, if not most, industries.

New methodology

As explained in the proposed rule and an accompanying white paper, SBA significantly changes its methodology for establishing size standards. Here’s a very high-level overview of the principal changes:

  • Assigning size standards to a mix of 4- and 5-digit NAICS codes instead of at the 6-digit NAICS code level
  • Converting many size standards from receipts-based to employee-based
  • Updating the factors for determining size standards from the seven factors currently used to the following three: national industry size, number of geographic markets, and an adjustment for nets imports, which are combined into an average market size measure
  • Updating the formulate for translating the factors into size standards
  • Adding a productivity growth adjustment for receipts-based size standards

If you’re interested, the separate white paper (also available for comment) is available here. To whet your appetite, SBA gives a regulatory history of its establishment of size standards! Get reading you incorrigible GovCon fiends.

Size standards

With the move towards to 4- and 5-digit NAICS codes, the total size standard count drops from nearly 1,000 to 338 under the proposed rule. In SBA’s view, this “will decrease confusion surrounding whether a small business fits into a specific 6-digit category bearing several similar industries.”

A handful of size standards remain the same under the proposed rule. But most change—some dramatically. Here’s a sampling of revisions:

  • 236220 (Commercial and Institutional Building Construction), now 2362 (Nonresidential Building Construction): $45 million => 600 employees
  • 238990 (All Other Specialty Trade Contractors), now 2389 (Other Specialty Trade Contractors): $19 million => 550 employees
  • 334111 (Electronic Computer Manufacturing), now 3341 (Computer and Peripheral Equipment Manufacturing): 1,250 employees => 2,500 employees
  • 541310 (Architectural Services), now 54131 (Architectural Services): $12.5 million => $135 million
  • 541611 (Administrative Management and General Management Consulting Services), now 5416 (Management, Scientific, and Technical Consulting Services): $24.5 million => $295 million
  • 561210 (Facilities Support Services), now 5612 (Facilities Support Services): $47 million => $156 million

SBA also proposes to eliminate the 18 subindustries, which are referred to as “exceptions” in the size standards table (e.g., 541330 (Exception 1) (Military and Aerospace Equipment and Military Weapons).

Comment period

The comment period for the proposed rule closes on September 21, 2026. That same closing date also applies to SBA’s white paper discussing its new methodology.

SBA drops new proposed size standards—big changes was last modified: August 21st, 2026 by John Mattox