What is a Small Business

    

SBA defines a small business as a concern that is organized for profit; has a place of business in the U.S.; operates primarily within the U.S. or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor; is independently owned and operated; and is not dominant in its field on a national basis. The business may be a sole proprietorship, partnership, corporation, or any other legal form. In determining what constitutes a small business, the definition will vary to reflect industry differences.


Size Standards
SBA has established numerical definitions, called "size standards," for every private sector industry in the U.S. economy; the North American Industry Classification System (NAICS) is used to identify the industries. An industry is coded with a six-digit number, such as 541330 for Engineering Services. A size standard, which is usually stated in number of employees or average annual receipts, represents the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a small business for SBA and Federal contracting programs. All Federal agencies must use SBA size standards for contracts identified as small business. 

The table below shows the most commonly used size standards within an NAICS industry sector.  If the size of a business exceeds the size standard for its overall industry sector, it may still be a small business for the specific six-digit NAICS industry. Some industries have higher size standards than the general one for the industry group. SBA’s Table of Small Business Size Standards lists size standards by six-digit NAICS industry codes.

 

NAICS Industry Sector

Size Standard

  Manufacturing

  500 employees

  Wholesale Trade

  100 employees

  Agriculture

  $750,000

  Retail Trade

  $7 million

  General & Heavy
  Construction (except
  Dredging)

  $33.5 million

  Dredging

  $20 million

  Special Trade Contractors

  $14 million

  Travel Agencies

  $3.5 million
  (commissions & other
  income)

  Business and Personal
  Services Except:

  $7 million

  Architectural, Engineering,
  Surveying, and Mapping
  Services

  $4.5 million

  Dry Cleaning and Carpet
  Cleaning Services

  $4.5 million



The Get Started section contains further information that will help you identify your industry classification and size standard.


Use of Size Standards for Government Contracts
A contract solicitation will designate the applicable size standard for the contract, based on the industry classification of the goods or services being procured. To bid on Federal contracts, a business must self-certify that it is a small business under the appropriate size standard in the solicitation. The size of the business at the time of self-certification prevails for that contract; a concern may grow above the size standard before or after the award without loss of eligibility to perform on that contract. (Some size standards are based on the average annual receipts for the most recent three years; a company could be above the numerical dollar value for one of the years, but still be below the average for the three years that the size standard is based on.) 

Misrepresentation of Small Business Status
In addition to other laws that may be applicable, the Small Business Act provides severe criminal penalties for knowingly misrepresenting the small business size status of a concern in connection with procurement programs, and criminal penalties for knowingly making false statements or misrepresentations to SBA for the purpose of influencing in any way the actions of the agency.

Size Protests and NAICS
Any interested party to a procurement may protest the self-certification of a bidder as a small business. An interested party may also appeal a NAICS designation made by the contracting officer on a specific procurement that has been set aside for small business. For further information, go to Size Protests and NAICS.

Additional Information
For more detailed information, go to Size Standards.
Small business regulations are contained in 13 CFR § 121 and the Federal Acquisition Regulation, 48 CFR §19.