News of the Day August 20, 2026
SBA Proposes Overhaul to Simplify Small Business Classification and Expand Access to Federal Programs

Yesterday, the U.S. Small Business Administration (SBA) proposed a comprehensive overhaul of its small business size standards, modernizing how the federal government defines and classifies small businesses across the United States. Published in a proposed rule, the new standards would simplify industry categorization and raise applicable size thresholds, allowing small but rapidly growing firms to continue qualifying and adding over 110,000 firms to the 36 million small businesses in America.

Mandated by law every five years, this historic update would introduce a market-size approach that would dramatically simplify industry classifications by transitioning from complex separate 6-digit North American Industry Classification System (NAICS) code standards to streamlined 4-digit category standards where appropriate. By cutting the total list of similar industry categories by approximately 65%, down to 338 broader classifications, the SBA seeks to remove regulatory complexities for business owners.

The proposed standards would also expand the official small business pool by over 110,000 firms, ensuring that rapidly growing companies can continue to qualify as small businesses under President Trump’s pro-growth economic agenda. By raising applicable size thresholds, the proposal is designed to reward growth rather than force successful firms out of small business eligibility prematurely, especially those in industries that are critical to American strength.

Key highlights of the proposed size standard overhaul include:

• Streamlines the existing NAICS structure to a 4-digit classification system that reduces total size standard categories from nearly 1,000 down to 338 broad industry groupings, simplifying how firms determine their small business status.
• Introduces regional market considerations to ensure size thresholds accurately reflect the realities of local economic competition.
• Expands the pool of employer small businesses (firms with 1 or more employees) by 1.8%, growing the nation’s 6.3 million employer firms by over 110,000 and adding to the 36 million small businesses that exist today.

The SBA is seeking comments on the proposed rule. Small businesses can check their current industry classification and size eligibility by visiting www.sba.gov/size-standards.