According to the National Law Review, the U.S. Small Business Administration (SBA) has proposed raising its monetary size standards for 263 industries in a rule issued on August 22, 2025. The article, “Government Contractors Should be Aware: SBA Intends to Increase and Revise Monetary-Based Size Standards,” was authored by Joshua A. Mullen of Womble Bond Dickinson (US) LLP. If finalized, these changes would allow more companies to qualify as small businesses for federal contracts and SBA programs, expanding access to set-aside opportunities and resources.
This update is part of SBA’s third five-year review of size standards required by the Small Business Jobs Act. The agency explained that the adjustments are intended to reflect inflation and economic growth, ensuring that its definitions of “small business” remain current. According to the SBA, “Federal agencies will have a larger pool of small businesses from which to draw for their small business procurement programs.” By raising the thresholds, the SBA aims to increase competition and broaden the pool of eligible firms.
For many businesses close to exceeding the current standards, the changes could extend their ability to participate in small business contracting programs. As the SBA noted, “Growing small businesses that are close to exceeding the current size standards will be able to retain their small business status for a longer period under the higher size standards, thereby enabling them to continue to benefit from the small business programs.” At the same time, the expanded pool will include companies that are currently considered too large, which may heighten competition for future set-asides.
The proposal focuses specifically on monetary-based size standards tied to the North American Industry Classification System (NAICS). For receipts-based industries, size is determined using a five-year average of total income plus cost of goods sold. For assets-based industries, size is based on total assets reported in the company’s fiscal year-end financial statements. SBA also noted that it will issue a separate proposed rule in the near future to update employee-based size standards, which typically apply to manufacturing and mining industries.
The public comment period for this proposal runs through October 21, 2025. Small business owners and government contractors are encouraged to review the SBA’s analysis and submit comments to ensure their perspectives are considered. Staying engaged in this process will help businesses anticipate the changes and position themselves to take advantage of new opportunities under the revised standards.