What Makes A Business “Small”?

If you own a company, it’s important that you’re aware of the size of your company and what it means for it. Depending on the size of their company, businesses all have different procedures to follow.
America is filled with small businesses and we hear that phrase quite commonly, but what exactly defines a business as ‘small’?

SBA Size Standard

The SBA sets numerical definitions for what a small business is. Defining this isn’t as easy as it sounds. To know whether or not your company is considered a small business, and whether you have the possibility of being eligible for government aid can be a complicated task.

If you want to determine whether your company qualifies as a small business you’ll have to look at your number of employees, annual sales, and your industry. It greatly depends on what industry you’re in, considering this isn’t one single metric for all companies to go by.
For many companies, the number of employees to be the standard size for a small business is 500 or less. But, once again, this depends greatly on the size of your industry to determine where your company fits.

Typically, the SBA says that to qualify as a small business, you must have between or below 100 and 1,500 employees and between or below $750,000 and $35.5 million in annual receipts.

The SBA offers financial aid to businesses that match their loan requirements and match their guidelines.

As well as numbers, the SBA also looks at a shortlist of other important factors to determine whether or not a company qualifies as a small business. They look to see if the company is a for-profit business if they’re headquartered in the US if it’s independently owned, and whether
it operates primarily in the US.

Why Does The SBA Size Standard Matter?

Why does the size standard matter? The SBA size standard lets businesses qualify for government aid that bigger corporations don’t receive. This is to help protect and promote small businesses in a business world that isn’t always too nice to the underdog.
By qualifying as a small business, the company will be on an equal playing field with bigger companies in their industry. Small businesses will have the opportunity to receive loans, grants, and have access to tools that will help them to compete against other companies in their industry.

Is My Company A Small Business?

Chances are that if you think your company is a small business, it probably is. However, if you have any doubts about if you meet the qualifications listed above, it’s better to quickly assess your sales and employees before applying for any government funding. It’s always better to be on the safe side before taking the time to apply for government aid.