Exactly What is a Small Business?
How Does the SBA Define a Small Business?
By Janover 7(a) Loans
U.S. Small Business Administration
Updated: February 19, 2023
Due to its mission, the SBA only guarantees loans to small businesses— but what is a “small business”? Well, according to the SBA, a small businesses have a maximum of anywhere between 250 and 1500 employees— all depending on the specific industry the business is in. Additionally, businesses have revenue limits that they must not exceed if they want to qualify for SBA financing. In general, companies with more than 1500 employees are not eligible for SBA loans.
Key Takeaways
- The SBA only guarantees loans to small businesses— but what is a “small business”?
- According to the SBA, a small businesses have a maximum of anywhere between 250 and 1500 employees— all depending on the specific industry the business is in.
- Businesses have revenue limits that they must not exceed if they want to qualify for SBA financing
- In general, companies with more than 1500 employees are not eligible for SBA loans.
- Make sure you’re getting the best financing terms and apply through Janover.
Sample SBA Size Limits for Specific Industries
Below, we’ve provided the SBA’s size limits for a few major industries:
- Finance and Insurance: No more than 1,500 employees, and no more than $32.5 million to $38.5 million in average annual receipts.
- Construction: No more than $36.5 million in average annual receipts.
- Retail Businesses: Depending on the exact niche, businesses may be limited by $7.5 million in average annual receipts, while other types of retail businesses are limited by 100 to 500 employee maximums.
- Scientific, Professional, and Technical Services: No more than $7.5 million to $20.5 million in average annual receipts, or a maximum of 1,000 to 1,500 employees.
- Manufacturing: Between 500 to 1,500 maximum employees, depending on specific sub-industry.
- Health Care/Social Assistance: No more than, $7.5 million to $38.5 million in average annual receipts, depending on specific sub-industry.
- Information: 500 to 1,500 maximum employees and maximum $7.5 million to $38.5 million, depending on the specific sub-industry/niche.
It’s important to keep in mind that the SBA has specific size standards for hundreds of industry niches, which can all be found on the SBA’s table of size standards. For example, in the manufacturing industry, chocolate production has a maximum employee limit of 1,250, while dog and cat food production has a maximum employee limit of 1,000. In comparison, roasted nut and peanut butter manufacturing has a maximum cap of only 750— so it pays to know the exact limits for the business you’re in.
Related questions
What is the Small Business Administration’s definition of a small business?
The Small Business Administration (SBA) defines a small business as one that is independently owned and operated, is organized for profit, and is not dominant in its field. The SBA also considers the size of the business in terms of its number of employees and/or its annual receipts. The size standards vary by industry and can be found on the SBA’s website here.
What criteria does the SBA use to determine if a business is small?
The SBA uses criteria such as average annual receipts over the past three years (per IRS), number of employees, tangible net worth, average net income after taxes for the past two years, and whether the size of the applicant’s business (and its affiliates) meets the size standard for the applicant’s industry to determine if a business is small…[MORE]
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To read the entire article at the Janover 7(a) Loans website , visit: How Does the SBA Define a Small Business?