SBA Proposes Higher Employee Thresholds for Small Business
The U.S. Small Business Administration has proposed simplifying and expanding its size standards, which could slightly increase the number of breweries
The U.S. Small Business Administration (SBA) has proposed substantial changes to its system for defining a small business. The plan would simplify the rules and raise the employee or revenue thresholds for many industries, potentially allowing slightly larger firms to qualify for SBA support.
These changes are not expected to significantly alter the competitive landscape for small and independent breweries. The trade group states that most craft breweries already meet the current definition. If adopted, the new standards would modify how breweries are treated under certain SBA programs.
SBA Programs for Small Businesses
The SBA acts as a key ally for small businesses through several programs. It guarantees portions of loans from private lenders, such as 7(a) loans for general business needs and 504 loans for major fixed assets like buildings and equipment. Another program, the Manufacturers’ Access to Revolving Credit (MARC), can provide up to $5 million in credit to qualifying small manufacturers, including breweries.
Qualifying as a small business also offers advantages in federal contracting. Many government procurement programs include set-asides for small businesses, which could help breweries compete to supply beer to federal agencies. Also, under the Regulatory Flexibility Act, federal agencies must consider the impact of new regulations on small businesses and potentially offer less burdensome alternatives.
Proposed Changes to Size Standards
The SBA's proposal involves two major shifts. First, it aims to simplify the system by applying size standards at broader industry classification levels. This would reduce the number of separate size standards from 978 to 338, a cut of about 65%. Second, the agency generally proposes to expand the definition of "small" to include somewhat larger firms. The method for measuring size would also change for some service-oriented businesses, switching from an average annual receipts threshold to one based on the average number of employees.
Impact on Breweries and Brewpubs
The changes would affect breweries differently depending on their primary business activity. Packaging breweries are generally classified under NAICS code 312120 for Breweries. The current SBA size threshold for this category is 1,250 employees. Under the proposal, breweries would be assessed under the broader Beverage Manufacturing standard (NAICS 3121), raising the threshold to 1,400 employees. The SBA estimates this change would result in just one additional U.S. Brewery qualifying as small.
Hospitality-focused breweries, such as brewpubs and taprooms, fall under different codes. The proposal would shift their measurement from annual receipts to employee count.
| Business Type | NAICS Code | Current 'Small' Threshold | Proposed 'Small' Threshold |
|---|---|---|---|
| Packaging Brewery | 312120 (Breweries) | 1,250 employees | 1,400 employees (under 3121 - Beverage Mfg.) |
| Full-Service Brewpub | 722511 (Full-Service Restaurants) | $11.5 million annual receipts | 850 employees (under 7225 - Restaurants) |
| Taproom/Drinking Place | 722410 (Drinking Places) | $9 million annual receipts | 700 employees (under 7224 - Drinking Places) |
The Brewers Association notes that the vast majority of craft breweries already qualify as small under the existing rules. Therefore, the group expects only a very small increase in the number of eligible craft breweries and does not view the proposal as materially changing their position. The association also sees no apparent danger in applying the same SBA standard to breweries and other beverage manufacturers, as the SBA focuses on general business issues rather than specific alcohol policy.
The SBA is accepting public comments on this proposal through September 21, 2026. The Brewers Association is monitoring the changes and has asked members with specific concerns to come forward.
