NAMC CALL TO ACTION | Massive Proposed SBA Size Standard Changes

By Editorial Team | September 9, 2026

Massive Proposed SBA Size Standard Changes May Put Some MBE Firms Out of the Construction Management Business

NAMC and Minority Business Enterprise Legal Defense and Education Fund (MBELDEF) are considering filing a complaint against the SBA in response to the proposed changes to its size standards announced on August 20.

One of the major proposed changes is to shift to higher revenue– $100 million firms with 1,000 employees wil be allowed in SBA size standards in many industries. For example, all the construction management & consulting services-related NAICS codes have revenue-based size standards ranging from $25 million to a maximum of $295 million, a more than 1,100% increase.

SBA is now proposing to change all of the construction industries to employee-based size standards of over 1,000 workers, with the new size standards ranging up to 1,500 employees, depending on the industry. For example, a firm currently operating in the other heavy and civil engineering construction industry, NAICS code 237990, qualifies as small if its average annual revenue over the past five completed fiscal years is less than $45 million. But under SBA’s new proposal, firms would qualify under the broader Construction NAICS Sector 23713 if their average number of employees per pay period over the last 24 months is less than 1,500 employees.

This means significantly larger and more firms would now qualify as small for construction. We need only to remember the last time we saw something like this was the PPP Loan, which took the money from Main Street to Wall Street. Gross revenue did not matter at all under the new guidance, only the number of employees. Then, the cap was 500; this time, the cap is triple that: 1,500.

In addition, SBA is proposing to change the NAICS level at which size standards are calculated, which will reduce the number of individual size standards. Along these lines, this will also result in SBA removing all size standard exceptions.

Currently, many NAICS codes have certain exceptions to size standards for various subindustries. One of these is the exception for NAICS code 541519, Information Technology Value Added Resellers (ITVAR), which currently has a size standard of 150 employees. ITVAR is not addressed directly in the proposed rule, but with the proposed shift to 4- or 5-digit NAICS levels to determine size standards, it appears that the size standard could be changing to $531 million. It is unclear how this will comport with the performance of work requirements for ITVARs performing on set-aside contracts.

Another major proposed change is the dramatic increase in most (but not all) of the current revenue-based size standards. To provide a few examples, the table below compares the current and proposed new size standards for several professional services industries. The magnitude of the proposed changes is readily apparent from the percentage increase, the lowest of which reflects an increase of more than 200%.

SBA explains that its proposals will increase industrial base resilience, participation in SBA loan programs, and satisfaction of small business goals by dramatically increasing the number of small businesses in federal contracting. While true, it is not clear if SBA considered the other side of that equation – namely, firms that currently qualify as small businesses would now have to compete for small business set-aside contracts against much larger and more sophisticated firms.