If you own a small business that relies on government contracts, SBA programs, or small business certifications, a major proposed rule from the U.S. Small Business Administration (SBA) could significantly impact your future opportunities.
The SBA says the proposal is intended to simplify how businesses are classified and allow growing companies to continue qualifying for small business programs. On the surface, that sounds positive. However, many small business owners are concerned that the changes could make it harder for truly small businesses to compete by allowing much larger companies to qualify as “small.”
The proposal would add more than 110,000 companies to the small business community by increasing many size standards and consolidating nearly 1,000 industry classifications into approximately 338 broader categories.
For some businesses, this could create new growth opportunities. For others, especially those competing for government contracts and set-aside programs, it could fundamentally change the competitive landscape.
Why Many Existing Small Businesses Are Concerned
Most small business owners expect to compete against companies of similar size. What worries many entrepreneurs is the possibility of competing against companies that are dramatically larger but still qualify as “small” under the new standards.
Industry groups and contractors have raised concerns that companies generating hundreds of millions of dollars in revenue could become eligible for programs originally intended to help smaller firms gain a foothold in the marketplace. Critics argue that many of these organizations already have larger workforces, dedicated proposal teams, stronger past performance records, and significantly greater financial resources.
For a business with 10 or 20 employees, competing against a company that may be ten or twenty times larger presents an entirely different challenge.
The Biggest Impact: Government Contracting
The most significant effects may be felt in the federal contracting marketplace.
Federal small business programs were created to help small companies compete for government work that might otherwise go to large corporations. If the SBA expands eligibility standards, many larger firms could gain access to those same opportunities.
As a result, existing small businesses could face:
- More competitors pursuing small business set-asides
- Lower contract win rates
- Increased proposal and business development costs
- Greater pricing pressure
- Slower growth opportunities
Many of the comments already submitted on the proposed rule express concerns that small businesses could find themselves competing against organizations with substantially more resources while still being classified in the same category.
What Could This Look Like in Practice?
Imagine a professional services firm with $5 million in annual revenue competing today against similarly sized businesses. Under the proposed rule, that same company could suddenly be competing for set-aside opportunities against firms generating hundreds of millions of dollars in revenue that now qualify as small businesses under revised size standards.
While both may technically qualify as small, their capabilities, staffing levels, proposal infrastructure, and financial resources are often vastly different.
What About WOSB, HUBZone, SDVOSB, 8(a), and DBE Firms?
Businesses participating in programs such as Women-Owned Small Business (WOSB), HUBZone, Service-Disabled Veteran-Owned Small Business (SDVOSB), 8(a), and Disadvantaged Business Enterprise (DBE) programs should also pay attention.
The proposal does not eliminate these certification programs. However, if significantly more companies become eligible as small businesses, competition within these programs could increase as well. Certified firms may keep their certifications, but they could be competing against a much larger pool of qualified businesses for the same opportunities.
Could Anyone Benefit?
Yes. Businesses approaching current size limits may welcome the changes. One of the SBA’s stated goals is to prevent growing companies from prematurely losing access to small business programs simply because they have been successful. The proposal would allow many firms to remain eligible longer while continuing to expand.
The debate is not necessarily whether growth should be supported. The debate is whether the proposed increases are so significant that they dilute the benefits intended for truly small businesses.
Why Your Voice Matters
The SBA is currently accepting public comments before the rule becomes final. This is your opportunity to explain how the proposal would affect your business, employees, customers, and future growth plans.
Federal agencies are required to review public comments, and the most effective comments are those that provide specific examples and measurable impacts rather than general objections.
How to Write an Effective Comment
Start by introducing your business:
- Company name
- Industry and NAICS code
- Number of employees
- Approximate annual revenue
- Certifications held
- Years in business
Next, explain how the proposal would affect your company.
For example:
Our company employs 15 people and generates approximately $4 million annually. If the proposed size standards are adopted, we expect to compete against firms many times our size for small business set-aside contracts. We believe this could reduce our contract awards and limit our ability to hire additional employees.
Whenever possible, include data such as:
- Current contract win rates
- Expected revenue impacts
- Planned hiring projections
- Increased proposal costs
- Lost business opportunities
Comments supported by facts and real-world examples tend to be the most persuasive.
You should also offer solutions. Consider suggesting phased implementation, more gradual size increases, retention of industry-specific exceptions, or additional analysis before finalizing the rule.
Where to Submit Comments
The SBA is accepting comments through the federal rulemaking process.
Reference Sources:
- Federal Register Proposed Rule: https://www.federalregister.gov/documents/2026/08/20/2026-17042/small-business-size-standards
- SBA Announcement: https://www.sba.gov/article/2026/08/20/sba-proposes-overhaul-simplify-small-business-classification-expand-access-federal-programs
- SBA Office of Advocacy Summary: https://advocacy.sba.gov/2026/08/20/sba-issues-proposed-rules-on-industry-size-standards-and-revised-size-standards-methodology/
- Comment Portal: https://www.regulations.gov
The current comment period closes on September 21, 2026.
The Bottom Line
Whether you support or oppose the SBA’s proposed rule, one thing is clear: it could reshape the federal small business marketplace for years to come.
For growing firms near existing size thresholds, the proposal may create valuable opportunities. For many smaller contractors, however, it could mean competing against larger and more established companies for the same contracts and small business benefits.
If your business could be affected, don’t assume someone else will tell your story. Review the proposal, assess the impact on your company, and submit a comment. The SBA has asked for feedback. Now is the time to make sure small businesses are part of the conversation.
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