Small Business Size Standards: A Historical Analysis of Contemporary Issues [January 3, 2014]   [open pdf - 449KB]

"Small business size standards are of congressional interest because the standards determine eligibility for receiving Small Business Administration (SBA) assistance as well as federal contracting and tax preferences. Although there is bipartisan agreement that the nation's small businesses play an important role in the American economy, there are differences of opinion concerning how to define them. The Small Business Act of 1953 (P.L. 83-163, as amended) authorized the SBA to establish size standards for determining eligibility for federal small business assistance. The SBA currently uses two types of size standards to determine SBA program eligibility: industry-specific size standards and alternative size standards based on the applicant's maximum tangible net worth and average net income after federal taxes. The SBA's industry-specific size standards determine program eligibility for firms in 1,047 industrial classifications in 18 sub-industry activities described in the North American Industry Classification System (NAICS). The size standards are based on one of the following four measures: number of employees, average annual receipts in the previous three years, average asset size as reported in the firm's four quarterly financial statements for the preceding year, or a combination of number of employees and barrel per day refining capacity. Overall, the SBA currently classifies about 97% of all employer firms as small. These firms represent about 30% of industry receipts."

Report Number:
CRS Report for Congress, R40860
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