A small business can grow itself out of federal lending eligibility long before it becomes a large company.

The Small Business Administration is proposing to give some of those firms more room to grow. Its proposed standards would raise revenue and employee limits across dozens of industries, adding an estimated 114,541 businesses to the pool eligible for SBA-backed lending and federal contracting programs.

In an Aug. 20 proposed rule, the SBA laid out a new methodology for determining which firms qualify as small businesses under federal programs. The agency would establish 338 size standards, replacing a system containing nearly 1,000 industry-specific standards and exceptions. The proposal is open for public comments until Sept. 21.

The proposal does not establish a new, all-encompassing definition of a small business. Size limits would continue to differ by industry and would still generally be based on annual receipts or employee counts. What changes is how those limits are calculated and, in many cases, how high a company can grow before crossing them.

The SBA would move from standards generally calculated at the six-digit NAICS level to a combination of broader four- and five-digit industry classifications. It also proposes eliminating maximum thresholds that currently cap revenue-based standards at $47 million and employee-based standards at 1,500 workers.

Those changes can produce much larger limits in individual industries. The SBA has estimated that the proposed employee threshold for semiconductor manufacturing would rise from 1,250 to 2,800, shipbuilding from 1,300 to 2,300 and oil drilling from 1,000 to 2,650.

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