In the U.S., almost every government entity is required by law to include small business suppliers, vendors or other types of product or service providers when making purchases that are a part of the programs they administer. But what exactly is a small business? The legislation that established the Small Business Administration states that unless specifically authorized by statute, no other federal department or agency may prescribe a size standard for categorizing a business concern as a small business concern unless such proposed size standard meets certain criteria and is approved by the Administrator of SBA. 

Therefore, the first step for a business to become a government contractor is to accurately meet the legal (or statutory) definition of “small business” for your specific industry.

(Note: This entry focuses specifically on size standards, not on the process of applying for a contract.)


To qualify as a small business government contractor, you must adhere to industry size standards established by the U.S. Small Business Administration. For most industries, the SBA defines a “small business” either in terms of:

1 | Average number of employees over the past 12 months
2 | Average annual revenue over the past three years

In addition, the SBA defines a small business as a concern that:

  • Is organized for profit
  • Has a place of business in the US
  • Operates primarily within the U.S. or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor
  • Is independently owned and operated (i.e., not a subsidiary of a larger company)
  • Is not dominant in its field on a national basis
  • Is a sole proprietorship, partnership, corporation, or any other legal form of ownership

In determining what constitutes a small business, the definition will vary to reflect industry differences, such as size standards.


North American Industry Classification System (NAICS)

The SBA uses the North American Industry Classification System (NAICS) as the basis for its size standards.  Visit the official NAICS website to find the code(s) that apply to your industry, then use the SBA’s Size Standards Tool  to determine if your business qualifies.

SBA Numerical Definitions of Small Business

The SBA has established numerical definitions of small businesses, or “size standards,” for all for-profit industries.

  • Size standards represent the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a small business concern.
  • In determining what constitutes a small business, the definition will vary to reflect industry differences.

Links to the Most Recent SBA Updates Related to Size Standards

Size standards change. But those changes are not across-the-board. For that reason it is important to seek the most recent information from the SBA regarding standards in your industry. The following links go to SBA online resources that are updated when changes are made in specific industries

What’s New with Size Standards

  • Get updates on small business size standards news.

Comprehensive Review of Size Standards

  • Find information on the recently completed comprehensive review of size standards in accordance with the Small Business Jobs Act of 2010.

What are the Small Business Size Standards?

  • Your business might be eligible for programs reserved for small business concerns. To qualify, your business must satisfy SBA’s definition of a business concern and small business size standards.

Affiliation

  • When you calculate the size of your business, you must include the annual receipts and the employees of your affiliates.

Small Business Size Regulations

  • The Small Business Act was created, in part, to help small businesses compete in our economic market. The act has made it necessary to establish standards of identifying small businesses.

Size Standards Methodology

  • For its ongoing comprehensive size standards review and future regulatory actions relating to size standards, SBA has developed a “Size Standards Methodology White Paper.”

Table of Small Business Size Standards

  • To help small business owners assess their small business status, SBA has established a Table of Small Business Size Standards.

Summary of Size Standards by Industry Sector

  • Size guidelines define the maximum size that a firm (including its affiliates) can be to qualify as a small business for most SBA programs. Learn about the common standards for a small business.

Size Protests, Size Determinations & Appeals

  • Learn about size protests, size determinations, and appeals.

Guide to Size Standards

  • This guide can help you understand how SBA defines a small business and how it establishes its small business size standards.

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