Main Street Monday: SBA Proposes a Much Bigger Definition of “Small”

August 24, 2026

Bob Coleman
Founder & Publisher

Main Street Monday: SBA Proposes a Much Bigger Definition of “Small”

SBA published a proposed rule in the Federal Register on August 20 that would significantly expand its small-business size standards.

SBA estimates the rule would add 114,541 businesses to the small-business population, increasing the total from 6.34 million to 6.46 million.

At the same time, SBA would cut nearly 1,000 separate size standards to 338.

The proposal also removes the current ceilings of $47 million in annual receipts and 1,500 employees.

The proposed methodology has no maximum.

For SBA 7(a) and 504 lenders, note the proposed increases:

  • Hotels and Motels: $503 million in annual receipts
  • Full-Service Restaurants: 850 employees
  • Gasoline Stations with Convenience Stores: 1,150 employees
  • Electrical Contractors: 550 employees
  • Child Care Services: $194 million in annual receipts

Restaurants show how much the approach is changing.

Today, full-service restaurants generally operate under an $11.5 million receipts standard and limited-service restaurants under $13.5 million.

SBA proposes replacing both with an 850-employee standard.

SBA estimates that change would bring another 4,987 restaurant businesses into small-business status.

Construction changes too.

Commercial and Institutional Building Construction would move from a $45 million receipts test to 600 employees. Plumbing, Heating and Air-Conditioning Contractors and Electrical Contractors would each move to 550 employees.

One SBA lending rule that does not change is the alternative size standard. 

An applicant that exceeds its industry size standard qualifies as small for 7(a) and 504 eligibility if the applicant, together with its affiliates, has tangible net worth of no more than $20 million and average net income after Federal income taxes of no more than $6.5 million for the preceding two fiscal years. 

If you wish to weigh in on the proposed changes, comments are due September 21, 2026.