SBA Proposes Increases to Small Business Receipts-Based Size Standards to Promote More Competition for Small Business Set-Aside Contracts

On August 22, 2025, the Small Business Administration (SBA) published a proposed rule that would raise the receipts-based small business size standards across 259 industries and the asset-based size standard across 4 industries. The proposed rule aims to provide greater opportunity for growing small businesses to retain their small business status longer and continue to benefit from SBA loan programs and federal contracting opportunities reserved for small businesses.

To calculate the proposed changes, the SBA used a recently revised “size standards methodology,” which among other changes calculates a disparity ratio for each industry based on the current small business portion of contract obligations and the small business share of industry receipts. When calculating an industry’s disparity ratio, if the ratio fell below 0.8, the SBA concluded that small businesses were substantially underrepresented in the federal market with the current size standard. A high ratio above 0.8 led the SBA to consider small business to be overrepresented. Based on SBA’s analysis, 263 out of 513 industries and subindustries demonstrated a need for an increase in the applicable size standard. The extent of the proposed increase varied by industry based on this analysis. For example, SBA increased current monetary-based small business definitions for the satellite communication industry from $44 million to $45 million and the pipeline transportation of natural gas from $41.5 million to $46 million. Interested parties can compare the current monetary thresholds (available here in the SBA’s table of size standard as of March 2023) against SBA’s proposed increases (at the chart included at the end of the rulemaking).

One likely (and intended) effect of the proposed rule is increased federal contracting competition resulting from a larger pool of qualifying small businesses. That may lead to lower prices for the government under set-aside competitions but also an increase in the number of procurements set aside. SBA also acknowledged that a potential downside is that “smaller small businesses could face some disadvantage in competing for set-aside contracts against their larger counterparts.”

Additionally, the SBA noted that its analysis proposed decreasing size standards for 203 industries and nine subindustries but ultimately decided to maintain the current size standards for those industries, including military and aerospace equipment and weapons and environmental consulting services. SBA’s rationale for declining to decrease size standards included that doing so was counter to SBA’s mission of promoting the interests of small business and free competitive enterprise, would potentially lessen the competition on set-asides, and could have negative impacts on the economy, government contracting, and the defense industrial base.

Comments to the proposed rule are due before October 21, 2025. SBA intends to publish another proposed rule on employee-based size standards in the near future.