SBA Proposes Changes to Its Small-Business Size Standards

The Small Business Administration (SBA) has proposed substantial changes to the way it sets size standards for small businesses. While the Brewers Association does not anticipate that these changes will materially change the competitive landscape for small and independent breweries, they will, if adopted, change how breweries are treated under some SBA programs.

As many small brewers know, SBA can be an important ally to small businesses. Among its important programs:

1. SBA guarantees a portion of loans made by private lenders, making credit available where it might not be under ordinary commercial terms. These "7(a) loans" have helped start and support many small breweries. SBA's "504 loans" provide financing for major fixed assets such as a brewery building, brewhouse, packaging line, or other long-lived equipment.
2. SBA's Manufacturers' Access to Revolving Credit (MARC) program can provide up to $5 million in revolving credit or term loans to qualifying small manufacturers, including qualifying breweries.
3. SBA recognition of a business as "small" can bring advantages in seeking federal contracts, as many federal procurement programs include set-asides for small businesses. Thus, qualifying as small can help breweries compete for contracts to supply beer to the federal government. (Notably, however, the Army & Air Force Exchange Service and Navy Exchange Service Command are not subject to the ordinary FAR/Small Business Act set-aside regime, although both seek small-business suppliers.)
4. Under the Regulatory Flexibility Act, federal agencies must consider the impact of many proposed regulations on small businesses and, when warranted, consider less burdensome alternatives. This can result in differing compliance requirements, longer implementation timetables, or exemptions for small businesses.

SBA now proposes two notable sets of changes to its size-standard system. First, SBA proposes to simplify the system by applying size standards at broader 4- and 5-digit NAICS levels rather than generally at the 6-digit level. According to SBA, this would reduce the number of separate size standards from 978 to 338, a reduction of about 65%.

Second, SBA generally proposes to expand the threshold for "small" to include somewhat larger firms. These changes vary from sector to sector. In some cases, mostly for service-oriented businesses, thresholds currently based on average annual receipts would be changed to thresholds based on average number of employees.

Packaging breweries are generally classified under NAICS 312120 - Breweries, covering establishments "primarily engaged in brewing beer, ale, lager, malt liquors, and nonalcoholic beer." The current SBA size threshold is 1,250 employees. Under the pending proposal, breweries would remain NAICS 312120, but SBA would apply the broader 3121 - Beverage Manufacturing size standard, increasing the threshold modestly to 1,400 employees. SBA estimates that this change would result in one additional U.S. brewery qualifying as "small."

Hospitality-focused breweries may fall under NAICS 722511 - Full-Service Restaurants or NAICS 722410 - Drinking Places (Alcoholic Beverages), depending on their primary activity. The current "small" thresholds are $11.5 million in average annual receipts for full-service restaurants and $9 million in average annual receipts for drinking places. Under SBA's pending proposal, a brewpub classified under 722511 would remain in that six-digit NAICS industry but would be subject to the broader 7225 Restaurants and Other Eating Places size standard of 850 employees. A brewpub or taproom classified under 722410 would remain in that six-digit industry but would be subject to the broader 7224 Drinking Places (Alcoholic Beverages) size standard of 700 employees.

As the numbers above illustrate, the vast majority of craft breweries already qualify as "small" for SBA purposes. The Brewers Association therefore expects that the proposal would produce only a very small increase in the number of craft breweries eligible for treatment as "small" under SBA programs. As such, the Brewers Association does not view the proposal as materially changing the position of small breweries. Moreover, because SBA focuses on business issues and not specific alcohol policies (unlike, for example, the Alcohol and Tobacco Tax and Trade Bureau), applying the same SBA size standard to breweries and other beverage manufacturers does not give rise to any readily apparent dangers for our membership.

We will continue to monitor this proposal, which SBA is accepting comments on through September 21, 2026. If any member has a particular concern about these changes, we would like to .