Size Standards

    

FAQs


Q. What are small business size standards?

A. SBA has established numerical definitions, called "size standards," for every private sector industry in the U.S. economy; the North American Industry Classification System (NAICS) is used to identify the industries. A size standard, which is usually stated in number of employees or average annual receipts, represents the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a small business for SBA and Federal contracting programs. All Federal agencies must use SBA size standards for contracts identified as small business.


Q. How does SBA define a small business?

A. The Small Business Act defines a small business as a concern that is organized for profit; has a place of business in the U.S.; 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; and is not dominant in its field on a national basis. The concern must meet the numerical small business size standard for its industry. The most common size standards are as follows:

  • 500 employees for most manufacturing and mining industries;
  • 100 employees for all wholesale trade industries;
  • $7 million for most retail and service industries;
  • $33.5 million for most general & heavy construction industries;
  • $14 million for all special trade contractors;
  • $0.75 million for most agricultural industries.

About one-fourth of industries have a size standard that is different from these levels. They vary from $0.75 million to $35.5 million for size standards based on average annual revenues and from 100 to 1,500 employees for size standards based on number of employees. Several SBA programs have either alternative or unique size standards, such as the Small Business Innovation Research (SBIR) program.


Q.  How does SBA develop or revise a size standard?

A.  Only the SBA Administrator can approve creating or changing size standards, after the Office of Size Standards (OSS) has made recommendations. Establishing and modifying size standards involve the examination and analysis of industry structural characteristics and the relative position of firms within an industry in terms of size. Before OSS makes any recommendation to the Administrator, it completes economic studies of the various industry structures, prepares issue papers, and makes preliminary or interim presentations to the Board.

In general, these factors are considered in establishing or reviewing size standards:

  • Industry structure analysis;
  • Degree of competition;
  • Average firm size;
  • Startup cost;
    Entry barriers;
  • Distribution of sales and employment by firm size;
  • Impact of different size standard levels on the objectives of SBA programs;
  • Comments from the public on notices of proposed rulemaking;
  • All other factors that may distinguish a small business in an industry.


Q.  Does SBA keep lists of eligible small businesses or issue certificates for firms to qualify as small businesses?

A.  No. But SBA does maintain lists of 8(a) Program participants and HUBZone businesses. For Federal procurements, a firm self-certifies its small business status in the Online Representations and Certifications Application when it submits its initial offer, based on the size standard specified in the solicitation. 


Q.  How do Federal agencies use SBA size standards?

A.  With few exceptions, Federal agencies use the size standards established by SBA. In addition, many other political entities, such as state and local governments, adopt SBA size standards. Most Federal agencies reserve all or some of their programs for small businesses, and set aside a share of their procurement activity exclusively for small businesses.


Q.  Can a Federal agency making a small business set-aside procurement use, at its discretion, a size standard other than what SBA has designated?

A.  No. Under law, an agency must use SBA's size standards. An agency has no authority to establish size standards different from SBA's on set-aside procurements.


Q.  A Federal agency wishes to grant regulatory relief for small business entities. Must it use SBA's size standards to define small business?

A.  Generally, Federal agencies use SBA size standards. However, if another small business definition is more appropriate to its needs, that agency may consult with SBA's Office of Size Standards to determine if it should request a more suitable small business definition from the SBA Administrator (see 13 CFR §§121.901 thru 904).