September 3, 2026.
WASHINGTON — A proposed overhaul of the federal government's definition of a “small business” could have significant implications for businesses across Michigan, including U.S. First Nations-owned enterprises, women-owned companies and other firms competing for federal contracts.
The U.S. Small Business Administration proposed the changes Aug. 20, describing the effort as one of the most significant revisions to federal small-business size standards in decades.
The proposal would dramatically consolidate the system used to determine whether a company qualifies as a small business. Nearly 980 six-digit industry-specific standards would be replaced by 338 broader standards, while many of the size limits would increase substantially.
For Michigan businesses that rely on federal contracts or are seeking to enter the federal marketplace, the changes could affect both eligibility and competition.
What the proposed changes mean
Today, SBA generally assigns a size standard to individual six-digit North American Industry Classification System, or NAICS, codes.
Those standards can be based on annual revenue or the number of employees a company has.
Under the proposal, many of those individual industry standards would be eliminated in favor of broader industry groupings.
That means a Michigan company that currently competes under a highly specific NAICS code could eventually be measured against a broader group of businesses — including companies it may not traditionally consider direct competitors.
At the same time, many of the proposed size ceilings are substantially higher.
SBA also proposes moving a significant number of industries from revenue-based standards to employee-based standards.
For growing businesses, that could extend the period during which they qualify as “small” under federal rules.
But it could also introduce new competitors into federal small-business contracting programs.
Michigan businesses could see both opportunities and challenges.
Michigan has a diverse small-business economy ranging from manufacturing and construction to professional services, transportation, technology, environmental services and specialized suppliers.
Many Michigan businesses also participate in federal procurement, either directly or as subcontractors.
For those companies, small-business status can be important because the federal government sets aside certain contracting opportunities specifically for small businesses.
If the proposed standards become final, some companies that have outgrown today's definition of a small business could once again qualify.
That could provide growing Michigan businesses with additional opportunities to compete for federal work.
However, the larger pool could also mean more competition for companies already participating in those programs.
For an established small contractor, the question may therefore not simply be whether the company remains eligible, but who else becomes eligible alongside it.
Potential impact on U.S. First Nations-owned businesses.
The proposal also deserves attention from U.S. First Nations-owned businesses and tribal enterprises involved in federal contracting.
Federal contracting programs can provide significant opportunities for qualifying U.S. First Nations-owned companies, including businesses participating in programs such as the SBA's 8(a) Business Development Program and other small-business contracting programs.
For tribal enterprises and other qualifying U.S. First Nations-owned businesses, the size of a company can be an important factor in determining whether it qualifies for particular small-business opportunities.
A change in size standards could therefore affect both sides of the equation.
A business that currently falls outside a small-business threshold could potentially become eligible.
At the same time, a broader definition could bring additional businesses into the competitive pool for contracts that were previously available to a smaller group of companies.
For tribal businesses developing construction, environmental, professional, manufacturing, information technology or other federal contracting operations, monitoring the final SBA standards could become an important part of federal procurement planning.
Women-owned businesses also have a stake.
Women-owned businesses could be particularly affected by the proposed changes.
The SBA operates the Women-Owned Small Business (WOSB) and Economically Disadvantaged Women-Owned Small Business (EDWOSB) contracting programs, which allow qualifying companies to compete for certain federal set-aside and sole-source opportunities.
Certification determines whether a company meets the ownership and other requirements for those programs.
But certification alone does not determine whether a company qualifies as “small.”
The applicable SBA size standard also matters.
That distinction could become increasingly important if the proposed changes are adopted.
A women-owned company could meet the requirements for a WOSB or EDWOSB program but still have to satisfy the applicable size standard for its industry.
If that standard changes, the competitive landscape could change with it.
Size standards can determine who gets to compete.
Federal small-business contracting is not simply about how much revenue a company generates.
The applicable size standard can determine whether a company is considered small enough to compete for opportunities reserved for small businesses.
That makes the SBA proposal relevant to businesses that may never have considered themselves part of a federal policy debate.
A company may not be seeking a federal contract today but could eventually view government procurement as a way to diversify its customer base.
For Michigan companies, particularly those in industries with significant federal purchasing, understanding the proposed changes now could help businesses determine whether federal contracting is worth pursuing.
SBA wants public comments.
The proposal is not final.
SBA must accept and review public comments before determining whether to finalize the standards or make changes.
The U.S. Women's Chamber of Commerce is encouraging its members and other affected businesses to submit comments based on their own experiences.
The organization has said its own comments will represent its position, but individual businesses can provide information the organization cannot — including which companies they actually compete against and how changes to the applicable size standard could affect their operations.
The public-comment deadline is September 21, 2026.
For Michigan businesses, U.S. First Nations-owned enterprises and women-owned companies, the comment period provides an opportunity to put specific business experiences into the federal record.
What Michigan businesses should be watching.
Businesses potentially affected by the proposal may want to examine several questions:
- What is the company's current NAICS code?
- What is the current SBA size standard for that industry?
- Would the proposed standard be based on revenue or employees?
- Would the company remain eligible as a small business?
- Would previously ineligible competitors become eligible?
- Does the company participate in WOSB, EDWOSB, 8(a), HUBZone or other federal contracting programs?
- Does the business currently hold or plan to pursue federal contracts?
- Could a broader industry grouping change the companies against which it competes?
For U.S. First Nations-owned businesses, tribal enterprises and women-owned companies, those questions may be particularly important when evaluating future federal contracting strategies.
A change that could reach far beyond Washington.
The SBA proposal may appear to be a technical change to federal regulations, but its effects could be felt by businesses far beyond Washington.
For a Michigan manufacturer, construction company, technology firm, consultant, professional-services company or tribal enterprise, the definition of “small business” can influence access to government opportunities worth millions of dollars.
The proposed overhaul could create new opportunities for some companies while increasing competition for others.
With the September 21 comment deadline approaching, Michigan businesses have an opportunity to tell SBA how the proposed standards would affect the companies that actually operate and compete in their markets.
The final outcome will determine whether the federal government's definition of a small business becomes significantly broader — and which Michigan businesses, U.S. First Nations-owned enterprises and women-owned companies ultimately benefit or face greater competition as a result.
