Receipts-Based vs. Employee-Based SBA Size Standards Explained

The SBA determines small business status using either annual revenue averages or employee counts, depending on the industry NAICS code.

How the SBA Selects the Size Basis

The Small Business Administration applies different measurement metrics depending on the capital intensity of the industry ^[1].

Receipts-Based Standards: Applied primarily to service, retail, and construction sectors (e.g., NAICS 541511). Size is determined by averaging the firm's gross receipts over five completed fiscal years ^[1].
Employee-Based Standards: Applied to manufacturing, mining, and wholesale trade sectors. Size is determined by counting the average number of employees for each pay period over the preceding 24 calendar months ^[1].

In federal procurement, a contractor must satisfy the specific size standard assigned to the NAICS code listed on the contract solicitation rather than their overall primary code ^[2].

Frequently Asked Questions

Q: Is my business size based on revenue or employees?

It depends on your NAICS code. Service businesses are usually measured by revenue (receipts), while manufacturing firms are measured by employee counts.

Q: What happens if a contract lists a code with a different size standard?

You must meet the size standard for the specific NAICS code assigned to that contract to bid as a small business.

Receipts-Based vs. Employee-Based SBA Size Standards Explained

How the SBA Selects the Size Basis

Frequently Asked Questions

Sources & References