SBA proposal could let much larger companies qualify as small businesses

A Trump administration Small Business Administration proposal would expand federal small-business eligibility by raising size standards across hundreds of industries. Critics say the change could divert contracting opportunities from truly small firms, including women- and minority-owned businesses.

Why it matters: - The proposal could reshape who competes for federal contracts reserved for small businesses. - Critics say the changes could move opportunities away from smaller firms that depend on set-asides to win government work. - Women- and minority-owned businesses could face tougher competition if larger companies qualify for the same programs.

What happened: - The Trump administration’s Small Business Administration proposed changes that could let companies with hundreds of millions of dollars in annual revenue qualify as small businesses for federal contracting. - The proposal would consolidate nearly 1,000 North American Industry Classification System codes into 338 broader industry groups. - The SBA also wants to raise the revenue and employee thresholds used to determine small-business status. - The public comment period runs through Nov. 20, 2026. - Business owners, federal contractors and other interested parties can submit comments during that period.

The details: - Management consulting firms could qualify as small businesses with annual revenue up to $295 million, up from the current $24.5 million limit. - That increase is more than 1,100%. - In semiconductor manufacturing, the employee limit would rise from 1,250 to 2,800. - The SBA was created in 1953 to support small businesses and preserve competitive enterprise. - The proposal has drawn scrutiny because small businesses play a central role in the federal contracting system.

Between the lines: - Laura Cherry, director of the Don’t Cheat Women Project, said redefining a company with hundreds of millions in revenue as “small” changes the meaning of the term. - Cherry said larger firms have resources that truly small businesses do not, which could leave smaller companies at a disadvantage. - The debate reflects a basic policy question: how large can a company grow before it is no longer meaningfully small. - The proposal also tests how far the government should stretch size standards before small-business programs lose their intended focus.

What's next: - The SBA will review public comments after the Nov. 20 deadline. - Contractors and advocacy groups are likely to keep pressing the agency on how the new size standards would affect access to federal work. - Final rules, if adopted, would determine which companies can compete under the expanded definitions.

The bottom line: - The proposal could broaden small-business eligibility so far that some large corporations gain access to programs meant for much smaller firms.