SBA Wants to Redraw Who Counts as Small — Comments Close September 21
A proposed rule would cut size standards from nearly 1,000 to 338, move whole sectors from revenue to headcount, and make roughly 114,000 more firms eligible. Your NAICS code may not survive in its current form.
On August 20, SBA published two concurrent proposed rules that would rewrite how the federal government decides which firms count as small. The first proposes new size standards for 338 industry groups. The second releases a revised methodology white paper explaining how those numbers were derived. Comments on both close September 21, 2026.
This is not the usual inflation adjustment. SBA reviews size standards every five years under the Small Business Jobs Act, and those reviews normally nudge thresholds a few million dollars. This one changes the architecture.
What the rule would actually do
Four structural changes matter:
Consolidation to 4- and 5-digit NAICS. The number of individual size standards drops from nearly 1,000 to 338 broad industry groupings. Firms would determine status against a broader category rather than a narrow 6-digit code.
Receipts to employees. Some industries shift from revenue-based to headcount-based measurement, changing not just the threshold but how it is calculated.
Regional market considerations. SBA proposes accounting for geographic market realities rather than applying one national threshold per industry.
Broader eligibility. SBA estimates the proposal would newly classify approximately 110,000 to 114,500 additional firms as small, an increase of roughly 1.8 to 2%.
Why this cuts both ways for IT and cyber firms
The headline is expansion, and for firms near their ceiling that is real relief — you stay small longer, or return to small status. But eligibility is a competitive resource, and widening the pool means more bidders inside the same set-asides.
If you compete in Computer Systems Design and Related Services, the consolidation question is direct: today's distinctions between the 6-digit codes in that family may collapse into a broader grouping. A firm that is comfortably small under a narrow code could find itself measured against a larger, more diverse peer set. [Your size status also gates the set-aside programs] built on top of it, so a reclassification reaches further than the size table alone.
The shift from receipts to employees changes the calculation itself. A firm with high revenue and lean headcount may benefit; a services firm carrying a large bench may not. Neither outcome is visible without checking your own code.
What to do before September 21
Look up your primary NAICS codes in the proposed rule's size standards table and note what your threshold becomes
Check whether your measurement basis changes from receipts to employees, and recalculate against the correct standard
Model whether you remain small, become small, or lose status under the proposed grouping
If a change would hurt you, file comments through regulations.gov before September 21 — the methodology white paper is open for comment too, which is where the reasoning behind the numbers can be challenged
Confirm your specific thresholds against the Federal Register text before acting on any summary, including this one
Reclassification does not take effect on publication. This is a proposed rule, and a final rule would follow after SBA processes comments. But size status determines which contracts you can bid, and this is the window where the numbers are still movable.
FAQ
When do comments on the SBA size standards rule close?
September 21, 2026, submitted through regulations.gov. Both the size standards rule and the revised methodology white paper are open for comment.
Does this change my size status now?
No. These are proposed rules. A final rule would follow after SBA reviews comments, and current size standards remain in effect until then.
Why is SBA moving from 6-digit to 4-digit NAICS codes?
SBA says consolidating to broader industry groupings simplifies how firms determine small business status, cutting the number of individual size standards from nearly 1,000 to 338.
Will more firms qualify as small?
SBA estimates the proposal expands the employer small business pool by about 1.8%, or more than 110,000 firms. That means more competition inside the same set-aside pool.
Size status decides which contracts you can bid, and SBA just proposed changing how it is calculated. Federal Cyber Brief tracks the federal IT and cybersecurity rules that gate small-business work — what changed, what it costs you, and what to do about it — every Tuesday.
Sources
Federal Register, Small Business Size Standards, August 20, 2026 — https://www.federalregister.gov/documents/2026/08/20/2026-17042/small-business-size-standards
Federal Register, Small Business Size Standards: Revised Size Standards Methodology, August 20, 2026 — https://www.federalregister.gov/documents/2026/08/20/2026-17039/small-business-size-standards-revised-size-standards-methodology
U.S. Small Business Administration, SBA Proposes Overhaul to Simplify Small Business Classification and Expand Access to Federal Programs, August 20, 2026 — https://legacy.sba.gov/article/2026/08/20/sba-proposes-overhaul-simplify-small-business-classification-expand-access-federal-programs
SBA Office of Advocacy, SBA Issues Proposed Rules on Industry Size Standards and Revised Size Standards Methodology — https://advocacy.sba.gov/2026/08/20/sba-issues-proposed-rules-on-industry-size-standards-and-revised-size-standards-methodology/
Federal News Network, SBA wants to give 114,000 more companies access to small business contracts, August 20, 2026 — https://federalnewsnetwork.com/acquisition-policy/2026/08/sba-wants-to-give-114000-more-companies-access-to-small-business-contracts/
PilieroMazza, SBA to Propose Massive Changes to Its Small Business Size Standards — https://www.pilieromazza.com/sba-to-propose-massive-changes-to-its-small-business-size-standards/
