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Understanding SBA Size Standards: What “Small” Means for Your Business

Picture of Luis By  Luis  ·  2 minute read

 

When applying for an SBA loan, one of the first hurdles is determining whether your business qualifies as "small." But what does "small" mean in the eyes of the Small Business Administration (SBA)? Understanding these size standards can help you determine your eligibility and move closer to securing the funding you need.

What Are SBA Size Standards?

The SBA uses specific metrics to define what constitutes a small business. These criteria ensure that SBA resources are directed toward businesses that truly need them, allowing fair access to capital and support.

Key metrics include:

  1. Annual Revenue: Often used for service-based industries.
  2. Number of Employees: Commonly applied to manufacturing and wholesale businesses.

Explore SBA size standards by industry.

Industry-Specific Criteria

1. Revenue-Based Standards

  • For service-based businesses, such as consulting firms, the SBA typically sets a maximum annual revenue cap, ranging from $7.5 million to $41.5 million, depending on the industry.
  • Example: A marketing agency with annual revenues under $16.5 million qualifies as small.

2. Employee-Based Standards

  • Manufacturing and wholesale businesses are judged by the number of employees.
  • Most industries have a cap of 500 to 1,500 employees to qualify.
  • Example: A furniture manufacturer with fewer than 1,000 employees is eligible for SBA loans.

3. Alternative Metrics

  • Some industries, like agriculture, use acreage or production capacity to determine eligibility.

Why These Standards Matter

Adhering to SBA size standards ensures:

  • Fair Competition: Resources are allocated to businesses that truly need support.
  • Access to Benefits: Only qualifying businesses can take advantage of SBA-backed loans, federal contracts, and other programs.

How to Determine If You Qualify

  1. Check Your NAICS Code: Each industry has a specific North American Industry Classification System (NAICS) code that dictates the relevant size standard.
  2. Use the SBA Size Standards Tool: Input your NAICS code, revenue, and employee count to confirm eligibility.
  3. Consider Affiliation Rules: If your business is part of a larger entity, the SBA may evaluate the combined revenue or employee count of all affiliates.

Use the SBA Size Standards Tool here.

Key Takeaways

  • SBA size standards vary by industry, focusing on revenue or employee count.
  • Meeting these criteria is essential for accessing SBA loans and other resources.
  • Properly identifying your business’s eligibility upfront can save time and avoid delays in the application process.

What’s Next?

In tomorrow’s post, we’ll discuss credit requirements for SBA loans, breaking down how personal and business credit scores impact your chances of approval.

 

If you’re unsure about your business’s size eligibility for SBA loans, I’m here to help. Visit AntonineCapital.com to learn more. Don’t forget to sign up for our monthly newsletter at AntonineCapital.com/newsletter for expert tips and updates.