Good morning. For as long as you've been in business, "small" has meant a number on your P&L. The SBA is proposing to stop measuring it that way — and for the trades, the replacement number is one almost none of you will ever hit.
Top story — the unit changes, not the level
The SBA published a proposed rule on 20 August that would rewrite the table every federal small-business program runs off. Most coverage has framed it as size standards going up. For construction that's the wrong frame. The unit changes.
Today you are a small business in plumbing, heating and air conditioning (NAICS 238220) if your average annual receipts are under $19.0 million. Electrical (238210) is $19.0M. Roofing (238160) is $19.0M. Residential remodelers (236118) are $45.0M.
Under the proposal, not one dollar figure appears anywhere in NAICS Sector 23 again. Plumbing/HVAC and electrical would each be small at 550 employees or fewer. Roofing gets folded into a single 4-digit bucket with concrete, framing, masonry, glazing and siding, small at 650 employees. Building finishing: 600. Other specialty trade: 550.
That is not a raise. It's a different measurement. A shop billing $25 million with 60 techs is not small today and would be small under this. And at 550 people, the test stops filtering the trades at all — SBA's own estimate is that the number of small plumbing and HVAC firms goes from 104,612 to 106,800, electrical from 77,572 to 79,376, roofing from 23,421 to 24,029.
Which is the catch. If nearly everyone is small, being small buys you less. SBA says it plainly at 91 FR 53773: "Growing small businesses closer to the size standard are therefore likely to face the greatest competition from the newly eligible firms under the proposed rule." If you bid set-asides, your competition tomorrow includes firms with 500-plus people on the books.
Again: this is a proposal. Comments close 21 September 2026. There is no effective date in the document, no grandfathering, and no transition period — those would come in a final rule that does not yet exist.
Quick hits
550 isn't a measurement. It's the floor plus fifty. The companion methodology paper sets a hard minimum: "For employment based size standards, the minimum size standard is 500 employees... For receipt based size standards, the minimum size standard is $30.6 million" (91 FR 54152). Plumbing/HVAC, electrical, other specialty trade and residential building all land at 550 — fifty above the floor. Worth noting the other half of that sentence too: by SBA's own new arithmetic the minimum receipts standard is $30.6 million, which is 61% above the $19M ceiling specialty trades live under right now.
Two codes, similar work, a 1,300-employee gap. Utility construction is set at the 5-digit level, so oil and gas pipeline contractors (23712) would be small up to 2,000 employees while water and sewer line contractors (23711) stop at 700. Meanwhile every trade inside 2381 — roofing, concrete, steel, framing, masonry, glazing, siding — shares one 650 number. The stated reason for aggregating was to end confusion about which category a firm sits in.
Almost nobody loses, and the regulator says it barely matters. SBA estimates "fewer than 200 businesses would lose small status under the proposed methodology, while about 114,236 would gain small status." OMB's verdict on a rule that reclassifies that many firms, at 91 FR 53769: "OMB has determined that this rule is not a significant regulatory action... any impact on the economy is expected to be de minimis."
The Tip — work out your two numbers before you need them
Two calculations, an hour of your bookkeeper's time, and both are useful whatever happens to the proposal.
One: your employee number, the SBA way. It is not your current headcount. Under 13 CFR 121.106(b)(1) it is the average across "each of the pay periods for the preceding completed 24 calendar months." Part-time and temporary people count exactly the same as full-time. Leased staff, temp-agency crews and anyone through a PEO count. Employees of affiliated companies get added to yours. If the proposal lands, that is the number that decides whether you're small — and the 24-month window means it's already being set by hiring you did last year.
Two: your receipts election, which is live today. This one isn't a proposal. Receipts are normally a 5-year average (13 CFR 121.104(c)). But for the 7(a), 504, Microloan, Disaster and Surety Bond Guarantee programs, a business with three or more completed fiscal years "may elect" either the 5-year or the 3-year average. If you had one enormous year in 2021 or 2022 that is dragging your 5-year figure over the $19M line, the 3-year election may put you back under it — and back inside 7(a). SBA approved $23 billion across 43,089 7(a) loans in FY2026 to 6 July. Ask your lender which average they ran before you accept that you don't qualify.
And if the headcount move would help or hurt you, the record is open until 21 September. Comments go to Docket SBA-2026-0199 at regulations.gov, identified by RIN 3245-AI67. There were 66,312 comments on file when we checked.
Tool watch — [Not sponsored]
The regulations.gov docket is free and it is the actual document, not somebody's summary: regulations.gov/docket/SBA-2026-0199. One trap worth knowing — all of the analysis sits in the companion methodology paper, which has its own separate docket, SBA-2026-0265. Commenting on the rule does not put you on the record against the method it was built from. If you care about how 550 was arrived at, you have to file in both.
And read the tables from the govinfo PDF rather than the web version. The Federal Register's HTML publishes those NAICS tables as scanned images, so the numbers are not in the text and not searchable.
That's the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today's Tool watch is our own honest read — no one paid for it. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime.
Sources: Federal Register — Small Business Size Standards (proposed rule, 20 Aug 2026) · Official PDF, 91 FR 53741 (govinfo) · Federal Register — Revised Size Standards Methodology, 91 FR 54096 · Methodology PDF (govinfo) · Current size standards — eCFR, 13 CFR Part 121 · Docket SBA-2026-0199 on regulations.gov