Trump Administration Proposes Raising Small Business Size Standards

Key facts

• The U.S. Small Business Administration (SBA) proposed an overhaul of its small business size standards.
• The proposal aims to simplify industry classifications and raise size thresholds for federal programs.
• Over 110,000 additional firms could qualify as small businesses under the new standards.
• The number of industry classifications would be reduced from nearly 1,000 to 338 broader groups.
• Specific size standards for sectors like semiconductor manufacturing and oil drilling would be significantly increased.

The U.S. Small Business Administration (SBA) has proposed a significant overhaul of its small business size standards, aiming to simplify classifications and raise eligibility thresholds for federal programs. This initiative, driven by the Trump administration's 'America First' policies, seeks to allow more rapidly growing firms to continue qualifying for government contracts and loans.

According to SBA Administrator Kelly Loeffler, the modernization acknowledges business growth and empowers them to compete more effectively. The proposal includes simplifying industry categorization by moving from complex 6-digit North American Industry Classification System (NAICS) codes to broader 4-digit classifications, reducing the total number of categories by approximately 65% to 338.

This overhaul is expected to expand the pool of eligible small businesses by over 110,000 firms. Specific examples of increased size thresholds include raising the employee limit for semiconductor manufacturers from 1,250 to 2,800, for ship building from 1,300 to 2,300, and for oil drilling from 1,000 to 2,650. The receipt-based standard for support activities for animal production would also see a substantial increase, from $11 million to $71 million.

The SBA is currently seeking public comments on the proposed rule, which is mandated by law to be updated every five years. The agency believes these changes will provide regulatory certainty, expand access to capital and counseling, and stimulate job creation and economic growth.