The agency that decides what counts as a small business is proposing to raise the line almost everywhere, and to stop measuring most industries in dollars at all

Almost every line the federal government draws between a small business and a large one is proposed to move, and it is proposed to move in one direction. The Small Business Administration has published new size standards for 338 industry groups and industries, along with a rewritten methodology for calculating them, and its own estimate is that fewer than 200 businesses would lose small status while roughly 114,000 would gain it.

Two numbers for that gain appear in the document. The cost-benefit section says about 114,236 firms would gain small status. The Regulatory Flexibility Act section says the standards would create an estimated 114,541 newly eligible small businesses. The rule does not reconcile them.

The arithmetic is being replaced, not just the thresholds

Today there are 102 different size standard levels covering 978 industries and 18 subindustries. The proposal collapses that to 338 standards by calculating at a mix of four and five digit industry codes rather than six, and by removing every exception in the table.

It also changes what the standards measure. Where the agency has discretion, the default becomes headcount rather than dollars, on the stated ground that fewer firms will then flicker across the line as revenue moves with inflation and volatility. Seven analytical factors are cut to three: the total size of the industry, the number of distinct geographic markets in it, and an adjustment for imports and exports. Those three combine into a single measure of average market size, which feeds a single formula. The formula keeps a floor and drops the ceiling, which is what allows some standards to land higher than the old method permitted.

The fifth change is the quiet one. Dollar-denominated standards have been adjusted for inflation since long before this rule, most recently with effect from December 2022. They have never been adjusted for productivity growth. This proposal adds that adjustment, on the reasoning that headcount standards already carry a productivity effect and receipts standards do not.

Forty-five industries where the agency will not follow its own analysis

The rule states plainly that the analysis supports a reduction in 45 industries, lists them in a table, and proposes to reduce none of them. Metal ore mining is one: the recommended standard is 1,450 employees and the proposed standard stays at 1,500. Electric power generation, transmission and distribution is another, where the recommendation is 700 employees and the standard stays at 1,150.

This is not new behaviour. After the 2007 to 2009 recession the agency declined to lower any standard in its first five-year review, and it did the same in the second, where analysis suggested 492 standards could fall and none did. The agency's stated reason this time is the conditions small firms faced between 2021 and 2024.

What it does to the contracting pool

The number worth watching is the one about firms already in the federal market. The agency estimates nearly 37,002 unique firms with fiscal 2025 contracts would be newly eligible small businesses. Those firms held roughly 105,655 contracts in fiscal 2025, worth more than $71bn. In engineering services alone, 5,314 firms with current contracts would become eligible to compete for small business set-asides, and their awards would start counting toward agency small business goals.

The agency puts the overall increase in the small business population at close to 2 percent, and it says so alongside a candid paragraph about who absorbs it. Competition for set-asides rises most for firms nearest the current ceiling, because those are the firms the newly eligible ones most resemble.

One industry moves the other way. In direct property and casualty insurance carriers, the switch from a headcount measure to a receipts measure means fewer than five firms lose small status.