Key facts
- The Trump administration is proposing to redefine small businesses by significantly increasing revenue and employee thresholds.
- The Small Business Administration (SBA) proposed the rule change on August 20, with a public comment period through September 21.
- Under the proposal, investment banking companies could have a revenue limit of $867 million, up from $47 million.
- Firms dealing with fiduciary activities could see their revenue limit increase to over $1 billion from $47 million.
- The SBA estimates around 114,000 more businesses would qualify as small if the rule is finalized.
- Senator Ed Markey criticized the proposal, calling it a move from the 'Small Business Administration' to the 'Big Business Administration'.
The Trump administration, through the Small Business Administration (SBA), has proposed a significant overhaul of the criteria used to define small businesses eligible for federal contracts and loans. The proposed rule, formally announced on August 20, aims to raise the revenue and employee limits for businesses to be classified as 'small.'
Under the current standards, many small businesses face revenue caps around $47 million. The proposed changes would dramatically increase these limits across various sectors. For instance, investment banking companies could see their revenue cap rise to $867 million, and firms involved in fiduciary activities could reach over $1 billion. The SBA estimates that these changes could classify approximately 114,000 additional businesses as small.
The SBA argues that this expansion will create a broader pool of businesses from which the government can award contracts and provide financial assistance, thereby 'rewarding growth' and strengthening domestic production. Some industry groups have previously advocated for updated classifications to help growing mid-sized firms that might otherwise lose out on opportunities.
However, the proposal has drawn sharp criticism from some quarters. Senator Ed Markey, ranking Democrat on the Senate’s Small Business Committee, lambasted the move, stating it would 'decimate opportunities for actual small businesses' by allowing billion-dollar companies access to federal resources. Procurement lawyers like Eric Crusius also expressed concern that the increased competition from larger firms would make it difficult for smaller businesses to compete for these same resources, potentially devaluing the 'small business' designation.
By law, the U.S. government is mandated to award 23% of its contracting dollars to small businesses. The Trump administration has met and exceeded this goal in recent years. The proposed changes are currently open for public comment until September 21.