How is Small Business Defined?

To qualify for a small business award for a contract, a business must qualify as “small” according to the SBA’s industry size standards. SBA defines industry specific size standards based on the average number of employees over the past 12 months or average annual receipts over the past three years categorized using the North American Industry Classification System (NAICS) codes. Please visit the SBA website to determine if your business qualifiesExternal as a small business concern and to learn more about NAICS codesExternal and to look up your industry’s code(s).

While size standards vary from industry to industry, SBA uses the following general criteria to define a small business concern. A small business…

  • Is organized for profit
  • Has a place of business in the United States (U.S.)
  • Operates primarily within the U.S. or makes a significant contribution to the U.S. economy through payment
    of taxes or use of American products, materials or labor
  • Is independently owned and operated
  • Is not dominant in its field on a national basis
  • May be a sole proprietorship, partnership, corporation, or any other legal form
What is a Small Business Concern?

According to the SBA, a small business concern is a business that is independently owned and operated and which is not dominant in its field of operation and in conformity with specific industry criteria.

Types of Small Businesses: The federal government defines types of small business and establishes associated goals to stimulate the balanced growth and utilization of all small business. All agencies, including CDC, have annual procurement goals for each major type of small business.

CDC’s Fiscal Year (FY) 2016 small business goals for each major type of small business as defined by HHS are outlined below.

CDC’s Fiscal Year (FY) 2016 Small Business Goals for Each Major Type of Small Business
Small Business Type CDC FY 2016 Small Business Goal [% of Total Annual Obligations]
Small Business 10%
Small Disadvantaged Business 5%
Women-Owned Small Business 5%
Service-Disabled Veteran-Owned Small Business 3%
HUBZone 3%

The table below provides an overview of the main types of small business classifications and their eligibility requirements. Click on the name of the type of small business to be routed to the SBA website to learn more about the resource and programs available for each business type.

Overview of the main types of small business classifications and their eligibility requirements
Type of Small Business Eligibility Requirements
Small Disadvantaged BusinessesExternal
  • The firm must be small, according to SBA’s size standardsExternal.
  • The firm must at least 51% owned and controlled by one or more disadvantaged persons.
  • The disadvantaged person or persons must be socially and economically disadvantaged.
Women-Owned Small Business (WOSB)External
  • The firm must be small, according to SBA’s size standardsExternal.
  • The firm must be at least 51% owned and controlled by one or more women, and primarily managed by one or more women.
  • The women must be U.S. citizens.
Service-Disabled Veteran-Owned Small Business Concerns (SDVOSBC)External
  • The firm must be small, according to SBA’s size standardsExternal.
  • The Service Disabled Veteran (SDV) must have a service-connected disability that has been determined by the Department of Veterans Affairs or Department of Defense.
  • The SDV must unconditionally own 51% of the SDVOSBC.
  • The SDVO must control the management and daily operations of the SDVOSBC.
  • The SDV must hold the highest officer position in the SDVOSBC.
HUBZone Small BusinessExternal
  • The firm must be small, according to SBA’s size standardsExternal.
  • The firm must at least 51% owned and controlled by U.S. citizens, a Community Development Corporation (CDC), an agricultural cooperative or an Indian tribe.
  • At least 35% of its employees reside in a HUBZone.
  • Its principal office must be located within a HUBZone, which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act.
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Page last reviewed: July 13, 2018