If you run a 12-person IT shop, you already share an industry code with firms at the $34 million ceiling. The SBA size standards proposed rule published August 20 would put you in the same category as a $531 million computer systems company.
That is where the small business definition 2026 is heading if this becomes final. It is a proposal. Comments close September 21. Your size status in SAM.gov stays as it is until a final rule.
SBA is not adding more federal work. OMB scored the rewrite as not a significant regulatory action because it does not increase the number of contracts, and SBA lending sits under statutory caps. The set-aside pie stays the same size. Who gets to sit in the "small" chair changes.
114,541 newly small. Almost nobody loses status.
SBA's own table moves employer firms classified as small from 6,344,967 to 6,459,508. Net plus 114,541, about 1.8 percent. Roughly 114,236 gain. Fewer than 200 lose small-business status.
Economy-wide, that is a rounding error on 6.3 million employer firms. The shops reading this live in a handful of codes.
Those 114,541 include 37,002 firms that already held FY2025 federal contracts. About 105,655 contracts. More than $71 billion. They are not startups. They are mid-tier contractors who sized out. Awards to them would start counting toward agencies' 23 percent small-business goaling, the share of contract dollars agencies try to send to small firms.
Engineering services (NAICS 541330) would add 5,314 existing contractors. Other computer related services, 2,247. Custom computer programming, 2,171.
If your firm is comfortably small today, those are the new competitors. They come with capture teams, bonding lines, and past performance you do not have. SBA admits the people who get squeezed are "growing small businesses closest to the current size standards." Profit margins on set-aside work (contracts reserved for small businesses) may compress.
$34 million to $531 million, same category
All of NAICS 5415, Computer Systems Design and Related Services, collapses to one receipts standard: $531 million.
Today 541511, 541512, and 541519 sit at $34 million. Computer facilities management sits at $37 million. The proposed jump is 1,462 percent. A 12-person MSP, an indie software shop, and a $400 million integrator would share the same "small" label.
The current 978 six-digit standards plus 18 exceptions collapse into 338. One of those exceptions is the Information Technology Value Added Reseller cap under 541519, currently 150 employees, because hardware pass-through revenue inflates receipts. That exception dies. Under the proposal, that work sits under the $531 million 5415 receipts standard. A 200-person reseller with $200 million in pass-through hardware can be small again.
Construction uses a different ruler for the same result. Commercial and institutional building construction (236220) flips from a $45 million receipts cap to 600 employees with no revenue limit. Highway and bridge goes to 700 employees. Other heavy civil, 900. A lean general contractor with 400 people and a few hospital or federal-building jobs can stay "small." A 12-person remodeler bids the same set-aside.
Wherever SBA has discretion, employee count becomes the default measure. Caps go away. The old ceilings were $47 million in receipts or 1,500 employees. Software publishers would move from $47 million receipts to 3,600 employees. Some proposed employee limits are high enough that multibillion-dollar public companies could qualify as small.
SBA's analytics pointed to decreases in 45 industries. SBA kept current standards anyway. The justification cites industrial-base resilience: small firms are 73 percent of companies in the U.S. defense industrial base, while DoD's small-business vendor count fell 49 percent from 2010 to 2024. That is also evidence the program has been concentrating, not spreading.
Two problems, one label
John Shoraka, former SBA associate administrator of Government Contracting, told Federal News Network the process is the problem. SBA published the methodology and the new SBA small business size standards on the same day, with a 30-day comment window. Prior reviews did methodology first, took comments, then receipts, then employees, in chunks.
I am a little concerned this is a done deal, especially with only a 30-day comment period.
He also said SBA may create a sector with a few dominant players, because there is still a huge difference between a $50 million company and a $450 million one. The original small-business program was supposed to be a safe ecosystem for new entrants.
Imani Augustus at Third Way named the split. The rewrite reaches the "missing middle," firms too big for SBA programs and too small for traditional capital. Then:
The rulemaking tends to fix the growth penalty for those at top, but it also has to protect those at the bottom. We believe those are two separate problems and expanding the pool of small businesses doesn't necessarily address the challenges either.
Eric Crusius, a procurement lawyer, put the shop-level math in one question: how do $10 million or $30 million or even $50 million companies compete with $300 million or $400 million companies?
These changes make being small not as special as it used to be now that nearly everyone will be considered small.
SBA is rewriting both the definition of small and who can enter 8(a) in the same 30-day window. Economic-disadvantage caps for individually owned 8(a) applicants stay at $850k net worth, $400k AGI, and $6.5 million in assets, so owners of the newly huge "small" firms generally still cannot enter as individuals.
The pie did not get bigger
The Federal Register is blunt. The rule will not impact the total number of federal contracts. SBA lending programs including 7(a) and 504 are subject to statutory caps. Any impact on the economy is expected to be de minimis.
Agencies can take small-business credit for $71 billion they already awarded to mid-tier firms. That may reduce the pressure to create new set-asides at the margin.
Local businesses did not get a bigger program. They got a category that now includes companies that already operate at enterprise scale.
"Small" stopped describing a shop.
Before September 21
Do not change SAM.gov. Size is determined at offer, under the standards in effect then.
Look up your primary NAICS in the side-by-side table in 91 FR 53741. For shops in IT, consulting, engineering, and construction, 5415, 5416, 5413, and 2362 are the ones that matter.
Count affiliated receipts and your 24-month average employees. The measure may switch. High-revenue, lean-headcount firms win under employee conversion. Labor-heavy shops can lose small status even if receipts sat under the old cap.
List who in your local market is $40 to $200 million in the same code. Those are the new competitors.
If you comment, do it by September 21 at regulations.gov, docket SBA-2026-0199. One page. Your NAICS. Your current size. The proposed size. What a $531 million competitor does to a 12-person bid. The 30-day clock is unusually short for a rule of this scope.
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