SBA Extends Comment Period to November as More Than 3,000 Responses Pour In Over Plan to Expand Small Business Definition

By Kekeletso Nkele, small.news Assistant

(small.news) — The Small Business Administration has extended its public comment period by 60 days to November 20, after receiving more than 3,000 written submissions on a proposed rule that would significantly broaden which businesses qualify as small under federal law — a change that has divided small business owners, lenders, trade groups, and lawmakers along sharply different lines, according to American Banker.

The proposal, announced in August, would consolidate nearly 1,000 industry-specific size classifications into 338 broader categories, allowing an estimated 114,000 additional companies to meet the federal definition of a small business and become eligible for SBA loans and federal contracting set-asides.

Lenders Back the Change; Small Businesses Push Back

The clearest divide in public responses has fallen between lenders and the small businesses the SBA programs are designed to serve.

America’s Credit Unions, the largest credit union trade organization in the country, filed a letter of support on September 21, arguing the expanded size standards would grow the pool of businesses eligible for SBA loans, creating additional lending opportunities for its member credit unions. Tyler Maron, the group’s regulatory advocacy counsel, said the organization has long encouraged the SBA to find ways to expand participation in its lending programs.

A banker at Ameris Bancorp, a Georgia-based institution with $28.5 billion in assets, filed an unsigned letter characterizing the broader parameters as both regulatory relief and economic realism, arguing that significantly higher costs across the economy make larger size thresholds reasonable.

The Independent Community Bankers of America said it had not yet taken a formal position on the proposal.

Small business owners responding to the proposal have largely taken the opposite view. The National Federation of Independent Business urged the SBA in a September 17 letter to proceed carefully, noting that the average NFIB member employs approximately eight people and operates without dedicated legal compliance or regulatory affairs teams. Elizabeth Milito, executive director of NFIB’s Small Business Legal Center, said businesses with hundreds or thousands of employees face fundamentally different challenges and have vastly different resources to compete for federal opportunities than the smallest operators.

Patricia Hussey, founder of Georgetown Policy Partners, a Washington, D.C.-based healthcare consulting firm, wrote in a September 22 letter that the proposed rule risks preserving the label of small-business protection while weakening its practical value for the businesses that need that pathway most.

Democratic Senators Call on SBA to Rescind the Rule

Twelve Democratic senators filed a joint letter to SBA Administrator Kelly Loeffler on September 21, urging the agency to withdraw the proposal. The letter, led by Senator Edward Markey of Massachusetts — the ranking member on the Senate Committee on Small Business and Entrepreneurship — said the rule would redefine what it means to be a small business and could allow companies with more than $1 billion in annual revenue to compete for federal small business contracts.

What Is at Stake for Small Business Owners

Federal small business designations determine eligibility for SBA loan programs and set-aside contracts, which reserve a portion of federal procurement spending for businesses that meet the size definition. If the rule passes as proposed, a significantly larger number of companies — including some that most small business owners would not recognize as small — would be entitled to compete for that reserved pool of contracts and loan access.

Supporters of the change argue it reflects economic reality, given that costs have risen substantially since many current thresholds were set. Opponents argue it dilutes a designation designed to protect genuinely small operators from competing against larger, better-resourced companies for federally allocated business.

Small business owners who wish to submit a comment can do so before the revised deadline of November 20, 2026.