For SBA lenders
Short answer
Beyond industry-specific size standards, a business must generally have a tangible net worth not exceeding $15 million and an average net income after federal taxes not exceeding $5 million for the preceding two years.
For a business to be considered 'small' and eligible for SBA financial assistance, it must meet both the industry-specific size standard (based on NAICS code, usually revenue or employees) AND a secondary test. This secondary test requires the business to have a tangible net worth of $15 million or less, and an average net income after federal income taxes (excluding carry-over losses) of $5 million or less for the two full fiscal years before the application date.
A manufacturing company with $20 million in annual revenue (within its NAICS code limit) applies for a 7(a) loan. However, its tangible net worth is $18 million and its average net income for the last two years was $6 million. The lender must decline the application as the business exceeds the alternative size standard.
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
13 CFR Part 121 - Small Business Size Regulations
SBA Table of Size Standards
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.
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