Last updated: September 17, 2026
Small businesses have until Monday, September 21, to comment on the SBA’s proposal to redefine what counts as “small.” The plan would cut about 1,000 industry size standards down to 338 and raise many thresholds tenfold or more. New analysis of the proposal shows that some firms would gain a lot and others, especially incumbent set-aside contractors, could lose ground.
The short answer
The SBA’s proposal would classify roughly 114,541 more businesses as small, and no existing size standard would go down. Firms that currently win small-business set-asides would face larger competitors. Comments are due September 21, 2026, at regulations.gov under Docket SBA-2026-0199 for the size standards and SBA-2026-0265 for the methodology.
What happened
The SBA published two linked proposals in the Federal Register on August 20. One is a revised methodology for setting size standards, and the other applies it industry by industry. According to Holland & Knight’s analysis, standards would be set at the four- or five-digit NAICS level. That means 276 four-digit and 62 five-digit standards. Receipts-based standards would have a floor of $30.6 million, and employee-based standards would have a floor of 500 employees. All 18 federal contracting exceptions would be removed.
Some of the threshold increases are very large. Computer systems design services (NAICS 541512) would go from $34 million to $531 million. Engineering services (541330) would go from $25.5 million to $252 million.
| Item | Current | Proposed |
|---|---|---|
| Number of size standards | About 1,000 | 338 |
| Computer systems design (541512) | $34M | $531M |
| Engineering services (541330) | $25.5M | $252M |
| Minimum receipts-based standard | Varies | $30.6M |
| Minimum employee-based standard | Varies | 500 employees |
| Federal contracting exceptions | 18 | 0 |
| Newly small firms | — | About 114,541 (37,002 with about $71B in FY2025 contracts) |
Why it matters: the winners and losers
Government contracts attorney Ray Jones of Spencer Fane wrote in Washington Technology that the proposal would help some firms and hurt others:
- Likely winners: firms that outgrew their size standard on revenue while keeping headcount steady, companies looking at small-to-small acquisitions, SBIC-backed investors in government services, and the roughly 114,000 newly small businesses.
- Likely losers: incumbent small contractors that will face larger competitors for set-asides, firms that rely on the 18 exceptions (IT value-added resellers in particular), and the “biggest fish in the set-aside pond,” who have the most to lose from more competition.
Some industries would also switch from a receipts test to an employee-count test. Jones warned that the switch “changes hiring calc,” because adding staff could push a firm over its size standard.
What this means for small business owners
- Run your NAICS codes against the proposed table. Do it for your primary code and every code you bid under.
- Check whether your measure is changing. If your industry moves from receipts to employees, your hiring plans now affect your eligibility.
- Estimate the competitive effect. If most of your revenue comes from set-asides, figure out how many larger firms could now bid against you.
- Comment with numbers. The SBA gives more weight to comments backed by specific data, such as margins, win rates and headcount, than to general objections. File at regulations.gov by September 21.
- Look beyond contracting. Size standards also decide eligibility for SBA loan programs. Ask your lender or advisor whether the change affects your financing options.
“Run your NAICS codes against the proposed table and find out where you stand.” — Ray Jones, Spencer Fane, in Washington Technology
Frequently asked questions
When is the SBA size standards comment deadline?
September 21, 2026, for both the proposed size standards (Docket SBA-2026-0199, RIN 3245-AI67) and the revised methodology (Docket SBA-2026-0265).
Will any business lose its small business status?
According to Holland & Knight, the proposal doesn’t lower any existing standard. The risk for incumbents comes from more competition, not from losing status.
How many businesses would become small?
About 114,541, including 37,002 firms that held roughly $71 billion in FY2025 federal contracts.
Is the rule final?
No. These are proposed rules. The SBA has to review the comments before it issues a final rule.
The bottom line
This is the biggest change to the definition of “small” in decades, and after September 21 the chance to shape it through comments is over. If set-aside work matters to your business, check your codes this week and file a comment backed by your own numbers.
