For SBA lenders
Short answer
The SBA determines if a business is "small" by comparing its average annual receipts or number of employees to the size standards corresponding to its primary North American Industry Classification System (NAICS) code.
Each business is assigned a primary NAICS code, which dictates its size standard. This standard is typically based on average annual receipts over the past five years or the average number of employees over the past 12 months. The business, including all affiliates, must not exceed the specified threshold for its NAICS code to be eligible as a "small business" for a 7(a) loan.
A manufacturing business with NAICS code 332710 (Machine Shops) has an employee-based size standard of 500 employees. The applicant business, including its affiliates, must have 500 or fewer employees to be considered small and eligible for a 7(a) loan.
Insider move
Lenders must accurately determine the primary NAICS code and apply the correct size standard, including a thorough analysis of all affiliates. Errors in size determination are a common reason for eligibility denial or guaranty repair.
13 CFR Part 121 - Small Business Size Regulations
SBA Table of Size Standards
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on affiliation & size
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