SBA Proposes Massive Changes to Small Business Size Standards

The U.S. Small Business Administration (SBA) has proposed big changes to its size standards, which if implemented would redefine many more CRM firms as small businesses.

The SBA is required by law to review existing size standards and the methodologies it uses to measure them every five years. The “small business” designation bestowed by the size standards enables companies to compete for federal small business set-aside contracts and access specialized SBA loan programs, among other benefits.

Typically the changes are incremental, including relatively small increases to account for inflation. Not this time. The SBA is proposing changes to their methodology that will result in eye-popping changes in the standards for small businesses across many NAICS codes, including NAICS codes used by CRM firms. For example, the size standard for NAICS code 541620, Environmental Consulting Services, would increase by 1453 percent, from $19 million to $295 million. The SBA estimates that this will increase the number of businesses defined as “small” that use that NAICS code by 200.

The SBA’s proposed changes to NAICS codes typically used by CRM firms are below.

SBA also is proposing to change the NAICS level at which size standards are calculated, which would reduce the total number of individual size standards.

The SBA says that the changes would “allow . . . small but rapidly growing firms to continue qualifying and adding over 110,000 firms to the 36 million small businesses in America.” The SBA adds that the changes are “designed to reward growth rather than force successful firms out of small business eligibility prematurely, especially those in industries that are critical to American strength.”

In its proposed rule, the SBA acknowledges that the change will likely mean more competition among small businesses as the number of firms being classified as small will grow. But they claim that the smallest firms are not likely to see increased competition because they are less likely to compete for the same contracts as firms newly classified under the proposed rule, who would be larger.

ACRA’s Government Relations Committee is analyzing the proposal. The SBA is accepting comments on the proposal until September 21, 2026. Visit the rulemaking notice for instructions on commenting.