Wondering if your business qualifies? Business grant eligibility criteria often start with size, which US programs commonly measure by average annual revenue or employee count within your industry.
This explainer sits within the wider topic of business grants, and it covers how common requirements are defined.
| Item | Value |
|---|---|
| Revenue-based size limits across industries | $2.25 million to $47 million average annual revenue |
| Employee-based size limits across industries | 100 to 1,500 employees |
| Number of individual industry size standards | Over 1,000 |
| SBIR and STTR size standard | 500 employees |
| Employer firms that qualify as small under SBA standards | About 97% |
| Required review of each industry size standard | At least once every five years |
These figures come from a Congressional Research Service Insight dated September 21, 2026 and a CRS report updated June 6, 2022. Size limits can change, so check the source before you rely on them.
What size means in grant eligibility criteria
Many programs begin by asking whether you run a small business. The U.S. Small Business Administration (SBA) runs a size standards tool, last updated October 15, 2024 on its page, that asks whether you qualify as a small business for government contracting purposes (see the SBA size standards page). Because that wording is about contracting, a specific grant may define eligibility in its own terms.
An SBA compliance guide dated July 2020 and hosted by the U.S. Treasury says SBA’s size rules also apply to small business loan programs and grant programs. It adds that agencies including the Food and Drug Administration and the Department of Veterans Affairs run programs where small business status is required for eligibility. You can read the wording in the SBA Small Business Compliance guide.
The idea has a statutory root. The Small Business Act of 1953 authorized SBA to set size standards so that only small businesses receive SBA assistance, according to the CRS report updated June 6, 2022.
Other tests, such as where a business operates or what a grant pays for, are set by each provider and differ by country. This explainer focuses on size, the test the U.S. sources define most fully. Terms vary by provider and country, so a funder’s own published rules always come first.
How size standards are measured
In the SBA system, a business counts as small only by reference to an industry code. The compliance guide says a business must meet the size standard assigned to a six-digit North American Industrial Classification System (NAICS) code (Treasury-hosted guide).
Companies choose their own NAICS codes, because the federal government does not select or assign them. A company with more than one code must name a primary code, which ordinarily describes the activity that earns most of its revenue, the guide says. It also warns that an IRS business activity code is not the same thing and should never be used to determine a company’s size.
The CRS report updated June 6, 2022 says SBA’s industry-specific standards rest on one of four measures:
- Number of employees.
- Average annual receipts.
- Average asset size, as reported in the firm’s four quarterly financial statements for the preceding year.
- A combination of number of employees and barrel-per-day refining capacity.
In practice, most standards use receipts or employees, with limited exceptions such as average assets for certain financial institutions, according to the compliance guide.
As of the CRS Insight dated September 21, 2026, SBA’s approach results in over 1,000 individual size standards. They are generally expressed as average annual revenue or average number of employees. Revenue limits range from $2.25 million to $47 million, and employee-count limits range from 100 to 1,500 employees.
How affiliation, receipts and employees are counted
Size is not always about the single company applying. The compliance guide says SBA counts receipts or employees plus those of all domestic and foreign affiliates, regardless of whether the affiliates are organized for profit (Treasury-hosted guide).
The rules sit in 13 CFR Part 121, Subpart A, which the Cornell Legal Information Institute reproduces. Its section headings show how the questions are split:
- § 121.103: how SBA determines affiliation.
- § 121.104: how SBA calculates annual receipts.
- § 121.106: how SBA calculates number of employees.
- § 121.107: how SBA determines a concern’s “primary industry”.
- § 121.108: the penalties for misrepresentation of size status.
That last heading is a reminder that reporting size accurately matters. The compliance guide states that it has no legal effect and creates no legal rights, and that SBA’s size regulations control if the two differ (guide). It works as a plain-language map, not a substitute for the rule.
Alternative tests and program-specific limits
Size standards are not identical across programs. The CRS report updated June 6, 2022 says SBA also uses alternative size standards based on an applicant’s maximum tangible net worth and average net income after federal taxes.
The Small Business Jobs Act of 2010 set an interim alternative standard for the 7(a) and 504/CDC programs of not more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes, until SBA acted (CRS). Those are loan programs, shown here only to illustrate that definitions differ by program.
For the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, the CRS Insight dated September 21, 2026 says the standard is employee-based, at 500 employees, citing 13 C.F.R. §121.702(c). The regulation has a separate section for these programs, § 121.702, and another for financial assistance programs, § 121.301.
Why the definitions keep changing
Defining small has long been contested. The CRS report updated June 6, 2022 says that without precise statutory guidance and consensus on how to define small, SBA’s size standards have often been challenged. It also says about 97% of all employer firms qualify as small under them, so the size test is broad.
Congress built in reviews. The Small Business Jobs Act of 2010 required SBA to review at least one-third of its industry size standards every 18 months and to review each standard at least once every five years, per the CRS report.
The Small Business Runway Extension Act of 2018 directs federal agencies proposing a size standard based on annual gross receipts to use average receipts from at least the previous five years, instead of the previous three years (CRS report).
More change was proposed. The CRS Insight dated September 21, 2026 describes a proposed rule announced August 20, 2026 that would shrink the number of size standards from around 1,000 to 338. It says 209 of the 338, or 62%, would be expressed as employee counts.
Because that rule is described as a proposal in the Insight, thresholds in force when you read a grant notice may differ from any figure here.
How can you check a grant’s size criteria?
Readers comparing programs can work through a short checklist before relying on any threshold:
- Find how the funder defines a small business, and whether it points to SBA size standards or its own test.
- Identify which industry code, and which primary code, the program uses.
- Check whether the test uses revenue, employees or another measure such as assets.
- Check whether the receipts or employees of affiliates are included.
- Note the date of the rule or notice, and confirm with the funder that it is the current version.
For background on where federal opportunities are posted, see the explainer on what is grants.gov. Before sharing business details with any grant offer, it is worth reading about business grant scams.
Frequently asked questions
Is business size always part of grant eligibility?
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No. The Treasury-hosted SBA guide says certain federal programs and contracts require small business status, but each provider sets its own conditions. Read the funder’s published rules for the program you are considering.
Does qualifying as small for contracting mean a grant will accept me?
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Not necessarily. The SBA tool page frames the question around government contracting purposes, and a grant may use a different definition. Terms vary by provider and country.
Do the revenue or employees of related companies count?
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Under SBA’s rules as described in its July 2020 compliance guide, receipts or employees of domestic and foreign affiliates are counted alongside the applicant’s own. A funder using a different test may count differently.
Can I use my IRS business activity code to check size?
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The SBA compliance guide says an IRS code is not the same as a NAICS code and should never be used to determine a company’s size. The guide says companies choose their own NAICS codes.
Do these definitions apply outside the United States?
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The sources here cover U.S. federal rules only. Other countries and regional funders use their own definitions, so check the relevant provider.
This page is for general information and education only and is not financial, investment, tax or legal advice.
