SBA Size Standards Explained: How to Know If You're a Small Business

What Are SBA Size Standards?

SBA size standards are the thresholds the U.S. Small Business Administration uses to define whether a business is "small" for the purpose of federal contracting programs. They exist for one reason: to prevent large companies from capturing contracts that Congress has reserved for small businesses through set-aside programs.

Each size standard is tied to a specific NAICS code. There is no single definition of "small" that applies across all industries. The SBA Office of Size Standards sets and periodically updates these thresholds based on industry characteristics — how capital-intensive the work is, how concentrated the market is, and what revenue or headcount levels are typical for competitive firms in that sector.

If you want to compete for small business set-asides, you must be below the size standard for the NAICS code assigned to that specific contract. Not your "primary" NAICS code — the one the contracting officer chose for that solicitation.

Revenue vs. Employee Count

SBA size standards use one of two measurement types depending on the industry:

Average Annual Receipts (Revenue)

Most service industries, construction, and retail use a revenue-based threshold expressed as average annual receipts. The SBA calculates this as your total revenue averaged over the most recently completed five fiscal years (it was three years prior to 2024). If your firm has been in business for fewer than five years, you average over the years you have. This smoothing prevents a single good or bad year from pushing you above or below the line.

For example, if your last five years of revenue were $18M, $22M, $26M, $30M, and $34M, your average annual receipts would be $26M. Under a NAICS code with a $34M threshold, you qualify as small. Under a code with a $24.5M threshold, you would not.

Number of Employees

Manufacturing, mining, and some utilities use an employee-based threshold. The SBA counts the average number of employees over the 12 most recently completed pay periods. This includes all full-time, part-time, and temporary workers. Unlike revenue, this is a rolling 12-period average, not a multi-year average.

A manufacturing firm with 450 employees competing under a NAICS code with a 500-employee threshold qualifies as small. That same firm bidding on a contract under a code with a 250-employee limit would not.

Size Standards by Industry

Here are the current SBA size standards for NAICS codes commonly seen in federal contracting. These are the thresholds as of 2024 and are subject to periodic SBA revision:

IT and Professional Services (Revenue-Based)

• 541511 — Custom Computer Programming Services: $34 million
• 541512 — Computer Systems Design Services: $34 million
• 541519 — Other Computer Related Services: $34 million
• 541611 — Administrative Management Consulting: $24.5 million
• 541612 — Human Resources Consulting: $19 million
• 541330 — Engineering Services: $25.5 million

Construction (Revenue-Based)

• 236220 — Commercial and Institutional Building Construction: $45 million

Facilities and Staffing (Revenue-Based)

• 561720 — Janitorial Services: $22 million
• 561320 — Temporary Staffing Services: $34 million
• 561210 — Facilities Support Services: $47 million

Manufacturing (Employee-Based)

• 334111 — Electronic Computer Manufacturing: 1,250 employees
• 336411 — Aircraft Manufacturing: 1,500 employees
• 332510 — Hardware Manufacturing: 500 employees
• 325411 — Medicinal and Botanical Manufacturing: 1,250 employees

The full table of size standards is published by the SBA at sba.gov/size-standards and runs to hundreds of entries. Always verify the current threshold before bidding — the SBA revises these periodically and an outdated number can lead to a compliance problem.

How to Calculate Your Size

Calculating your size for SBA purposes is not as simple as checking your most recent tax return. Here's the actual process:

Average Annual Receipts Formula

Take your total receipts (gross revenue, not net income) for each of the last five completed fiscal years. Add them together and divide by five. That number is your average annual receipts. Compare it against the size standard for the NAICS code on the contract you want to bid on.

Affiliate Rules

This is where most contractors get tripped up. The SBA counts the revenue (or employees) of all your affiliated companies when determining your size. Affiliates include any entity you control, any entity that controls you, and any entity under common control with you. If you own 51% of a $10M IT firm and 51% of a $15M staffing company, the SBA considers your combined size to be $25M for purposes of the IT firm's size determination.

Control can be established through ownership, management, contractual relationships, or even economic dependence. If 70% of your revenue comes from a single prime contractor, the SBA may consider you affiliated with that prime — even without any ownership connection.

Joint Ventures

Joint ventures have special rules. Under the SBA's All Small Mentor-Protégé program, a small business can form a joint venture with a large mentor and still qualify as small for set-aside contracts. Outside of approved mentor-protégé relationships, a joint venture's size is generally determined by combining the partners' sizes, which can push the venture over the threshold.

What Happens If You're Too Big

Outgrowing your small business size standard is not the end of your government contracting career. It does change your strategy.

Graduating from Small Business Programs

If you exceed the size standard for your primary NAICS code, you lose eligibility for small business set-asides under that code. You may still be small under other NAICS codes with higher thresholds. Businesses that grow past the line often shift their bidding strategy toward codes where they still qualify.

Full-and-Open Competition

Set-aside contracts are only a portion of the federal marketplace. Large businesses compete on full-and-open contracts alongside small firms. Many successful firms transition from set-asides to full-and-open as they grow. The past performance you built as a small business gives you an advantage in these competitions.

Subcontracting

If you can no longer prime small business contracts, you can still participate as a subcontractor to other small businesses. Large federal contracts also have small business subcontracting plan requirements, which creates demand for small business subcontractors.

Recertification Rules

Size status is not checked continuously. You self-certify your size when you submit an offer and at certain recertification events (like option exercise or contract novation). If you were small when you won the contract, you generally remain small for the life of that contract, even if you grow past the threshold during performance.

Common Size Standard Mistakes

These are the errors we see small business contractors make most frequently:

Not Checking Per-NAICS Code

Your size status is not a single yes-or-no. You can be small under one NAICS code and large under another. A $20M firm is small under 541512 (Computer Systems Design, $34M threshold) but large under 541612 (Human Resources Consulting, $19M threshold). Always check the size standard for the specific NAICS code on the solicitation you're considering, not just your "primary" code.

Ignoring Affiliate Rules

Contractors who own or are partially owned by other entities frequently forget that the SBA aggregates affiliated companies. This is especially common with private equity-backed firms, franchisees, and businesses where a founder has ownership stakes in multiple companies. If your combined affiliate revenue pushes you over the threshold, you are not small — even if your individual company is well below the line.

Not Recertifying After Growth

While you can remain small on existing contracts, you must accurately represent your size on new proposals. Firms that grow past a size standard sometimes continue certifying as small on new bids out of habit or ignorance. This is a false certification and can result in contract termination, debarment, and civil or criminal penalties under the False Claims Act.

Using the Wrong Calculation Period

The SBA shifted from a three-year to a five-year averaging period for annual receipts. Contractors using the old three-year average may calculate a different (and incorrect) size. Always use the current SBA formula, which is the five most recently completed fiscal years for revenue-based standards.

How GovConToday Uses Size Standards

When you set up your GovConToday profile, you enter your NAICS codes and set-aside preferences. Our matching engine uses those codes to surface contracts where your NAICS codes align with the solicitation. When a contract is posted as a small business set-aside under NAICS 541512, we show it to subscribers who have 541512 in their profile — meaning you only see set-aside opportunities where your NAICS codes indicate you could qualify.

This removes one of the biggest time sinks in opportunity hunting: clicking into a solicitation, finding the NAICS code, looking up the size standard, and then realizing you don't qualify. With NAICS-based matching, that filtering happens before the digest reaches your inbox.

Key Takeaways

• SBA size standards define whether your business is "small" for a specific government contract. The threshold changes based on the NAICS code assigned to the solicitation.
• Most service industries use average annual receipts (revenue averaged over five years). Manufacturing typically uses average employee count over 12 pay periods.
• Common thresholds range from $19M to $47M for revenue-based standards and 500 to 1,500 employees for employee-based standards. Always check the current SBA table.
• The SBA counts all affiliated companies when calculating your size. Ownership stakes, management control, and economic dependence can all trigger affiliation.
• You can be small under one NAICS code and large under another. Check the specific code on each solicitation before bidding.
• If you outgrow small business thresholds, you can still compete on full-and-open contracts, subcontract, or bid under NAICS codes with higher thresholds.