On August 20, 2026, the Small Business Administration published a proposed rule that would set new small business size standards for 338 industry groups and industries. A second, companion document explains the updated method SBA used to calculate them. Both are open for public comment through November 20, 2026.
This is a proposal, not a final rule. No size standard has changed, and nothing in this post is in effect today. But the changes are significant enough that every company competing for federal work should understand them before the comment window closes.
Update, October 5, 2026. SBA has extended the comment period on both proposed rules by 60 days. The original deadline was September 21. Comments are now due Friday, November 20, 2026, under docket SBA-2026-0199 at regulations.gov. If you did not get to it in September, you have a second window to run your numbers and file. Questions go to GCBDregs@sba.gov.
What SBA is proposing
The proposal makes four main changes.
1. Size standards would increase across the board. Engineering services would move from $25.5 million to $252 million in average annual revenue. Custom computer programming would move from $34 million to $531 million. Management consulting would move from $24.5 million to $295 million. Increases of this scale apply across most service industries.
2. No size standard would decrease. SBA's analysis identified 45 industries where the data supported a lower standard. SBA chose to keep all 45 at their current levels. No business loses its small business status under this proposal.
3. Fewer, broader categories. Today there are 978 size standards, one for each 6-digit NAICS code. The proposal consolidates them into 338, mostly at the 4-digit level. The 18 special exceptions in the current table, such as the 150-employee standard for information technology value-added resellers, would be eliminated.
4. Many industries switch from revenue to employee count. Construction is the clearest example. A commercial building contractor is small today at $45 million in revenue. Under the proposal, the test becomes 600 employees, and revenue no longer matters.
The overall effect, by SBA's own estimate: about 114,500 additional companies would qualify as small.
Why this matters for current small businesses
If your company is well under today's limits, the proposal does not threaten your status. What changes is your competition.
SBA estimates that roughly 37,000 companies that held federal contracts in fiscal year 2025 would become newly eligible small businesses. Those companies performed more than 105,000 contracts last year worth over $71 billion. They already have past performance, established teams, and proposal experience. Under the current standards, they compete in full and open procurements. Under the proposed standards, they can compete for small business set-asides.
The concentration matters as much as the count. In engineering services alone, more than 5,300 firms with current federal contracts would become small. In management consulting, more than 1,800.
SBA acknowledges this directly in the rule. Its analysis states that growing small businesses close to the current size standard "are likely to face the greatest competition from the newly eligible firms."
There is a benefit on the other side of the ledger. Contracting officers must set work aside for small businesses when at least two small firms are expected to bid. A larger pool of small businesses means more procurements meet that test, so more work should be set aside overall. Contracts awarded to the newly small firms would also count toward the federal small business contracting goals that agencies are graded on each year. Whether that offsets the added competition will vary by industry and by company.
How big can a "small" business get under this proposal?
There is no ceiling written into the rule.
SBA's methodology document explains how each standard gets calculated. Rather than picking a number per industry, SBA uses a formula anchored at two points. For revenue-based standards, the floor is $30.6 million, and a $500 million standard corresponds to an industry averaging $20 billion in receipts. For employee-based standards, the floor is 500 employees, and a 2,500-employee standard corresponds to an industry averaging 200,000 employees.
Above those anchors, the formula keeps going. SBA says so plainly: "Due to the formula for calculating size standards, there is no explicit maximum size standard; rather, the calculated size standard grows more slowly as the average market size gets bigger."
In practice the curve flattens, and that is the point SBA is making. Moving an industry's average size from $20 billion to $20.1 billion raises the standard by only $1.3 million. But "no explicit maximum" is SBA's own description of its method, and it is worth understanding before you decide whether to comment.
The floor matters too. A $30.6 million minimum means that in the smallest industries, a company can be several times the size of today's typical competitor and still count as small.
Construction: a different measuring stick
For most industries, the proposal raises a dollar limit. For construction, it replaces dollars with headcount.
| NAICS | Industry | Current standard | Proposed standard |
|---|---|---|---|
| 236220 | Commercial and institutional building | $45 million | 600 employees |
| 236115 | New single-family housing | $45 million | 550 employees |
| 236118 | Residential remodeling | $19 million | 550 employees |
| 237110 | Water and sewer lines | $45 million | 700 employees |
| 237310 | Highway, street, and bridge | $45 million | 700 employees |
| 237990 | Other heavy and civil | $45 million | 900 employees |
| 238110 | Concrete foundations | $19 million | 650 employees |
| 238160 | Roofing | $19 million | 650 employees |
| 238210 | Electrical | $19 million | 550 employees |
| 238220 | Plumbing and HVAC | $19 million | 550 employees |
| 238910 | Site preparation | $19 million | 550 employees |
This change can move a company in either direction. A contractor with high revenue and a lean crew could gain small business status. A labor-intensive contractor with modest revenue and a large workforce could lose it.
Employee-based standards are calculated as the average headcount over the previous 24 months, and part-time and temporary workers count. Most construction firms have never had to run this calculation. If you are one of them, run it now, for every NAICS code you bid under.
Proposed standards for common service industries
The table below covers the service codes most of our clients work in. Figures are average annual revenue unless noted.
| NAICS | Industry | Current standard | Proposed standard |
|---|---|---|---|
| 541310 | Architecture | $12.5 million | $135 million |
| 541330 | Engineering | $25.5 million | $252 million |
| 541370 | Surveying and mapping | $19 million | $92 million |
| 541380 | Testing laboratories | $19 million | $156 million |
| 541511 | Custom computer programming | $34 million | $531 million |
| 541512 | Computer systems design | $34 million | $531 million |
| 541519 | Other computer services | $34 million | $531 million |
| 541611 | Management consulting | $24.5 million | $295 million |
| 541620 | Environmental consulting | $19 million | $295 million |
| 561110 | Office administrative services | $12.5 million | $127 million |
| 561210 | Facilities support | $47 million | $156 million |
| 561612 | Security guards and patrol | $29 million | $186 million |
| 561720 | Janitorial | $22 million | $58 million |
| 561730 | Landscaping | $9.5 million | $58 million |
| 811310 | Industrial machinery repair | $12.5 million | $393 million |
The increases are not uniform. Janitorial services roughly doubles while industrial machinery repair increases more than thirtyfold, and a few standards, such as solid waste collection at $47 million, do not change at all. Check your specific codes rather than assuming a pattern.
If your code is not listed, the full comparison table is in the August 20 Federal Register issue, beginning at page 53745 and ordered by NAICS code.
What to do before November 20
Check your status under the proposed standards. Compare your five-year average revenue to the proposed dollar limit, or your 24-month average headcount to the proposed employee limit, for every NAICS code you bid under. A company can be small under one code and not another. Size status already comes up more often than it used to under the SBA recertification rule that took effect this year, so this is a calculation worth having current anyway.
Pay particular attention if your measuring unit changed. Moving from a revenue test to an employee test, or losing an exception such as the value-added reseller standard, can change your status even when the headline number went up.
Consider submitting a comment. Comments are due November 20, 2026, through regulations.gov under docket SBA-2026-0199. Specific comments carry more weight than general ones. If the proposal would put your company in direct competition with firms many times your size, describe that with your own numbers. Size standards keep their comment period because Congress requires it, but SBA has since ended its voluntary policy of collecting comment on rules the law does not require, so the follow-on rules that decide how a new standard applies to your company may not get one.
Do not make structural changes yet. Proposed rules often change between proposal and final. This one has drawn substantial attention, and the final version may look different. Model the impact now; act when the rule is final.
The bottom line
This is the broadest revision to small business size standards in years. For most small businesses, the risk is not losing small status. It is that the set-aside marketplace becomes home to much larger competitors than it holds today. If that happens, teaming with other small firms becomes an even more important way to compete, and as we covered recently, agencies cannot take that option away from you.
Every contractor should know where they stand under the proposed standards before the comment period closes on November 20. If you would like help running that analysis across your NAICS codes, talk to an advisor.
This post covers a proposed rule. We will update it when SBA issues a final rule or changes the comment deadline again.