Definition of a Small Business (NAICS codes) and Small Business Types

A small business, including its affiliates, is one that is independently owned and operated, not dominant in the field of operation in which it is bidding on government contracts, and qualified as a small business under the criteria in 13 CFR part 121, and NAICS size standards.

The North American Industrial Classification System or NAICS codes determine whether a business is considered small by their industry code. These codes pertain to the size of the firm and not the value of the procurement. The standards are set by either the number of employees or by the average annual sales over a three-year period.

Small Disadvantaged Businesses (SDB) - eligibility requirements

  • The firm must be 51% or more owned and control by one or more disadvantaged persons.
  • The disadvantaged person or persons must be socially disadvantaged AND economically disadvantaged.
  • The firm must be “small” in its primary industry (NAICS code) in accordance with SBA’s size standards for that NAICS code.

Since October 2008, small businesses can self-represent their status as a small disadvantaged business (SDB).

8(a) Program - eligibility requirements

The 8(a) Business Development program is a nine (9) year program that you must be certified by the SBA to enter.

  • The business must be majority-owned (51 percent or more) by an individual(s).
  • The individual(s) must be an American citizen, by birth or naturalization.
  • The business must be majority-owned (51 percent or more) and controlled/managed by socially and economically disadvantaged individual(s).
  • The individual(s) controlling and managing the firm on a full-time basis must meet the SBA requirement for disadvantage, by proving both socially disadvantaged and economically disadvantaged
  • The business must be a small business as determined by the NAICS code/size standard.
  • The business must demonstrate potential for success.
  • The principals must show good character.
  • Separate eligibility requirements exist for a business that is owned by American Indians, Native Alaskans, Native Hawaiians or Certified Development Companies.

Small Woman-Owned Business (WOB) - eligibility requirements

To be eligible, a 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.
  • The firm must be “small” in its primary industry (NAICS code) in accordance with SBA’s size standards for that NAICS code.
  • Economically disadvantaged is a new category and in order to be eligible a WOB must demonstrate economic disadvantage.

Small Historically Underutilized Business Zone (HUB) – eligibility requirements

The HUB program helps small businesses in urban and rural communities gain preferential access to federal procurement opportunities, must be certified by the SBA.

  • Must be a small business by SBA standards
  • Must be owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, an agricultural cooperative, or an Indian tribe
  • Principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act
  • At least 35% of its employees must reside in a HUBZone.

Small Veteran-Owned Businesses (VOB) – eligibility requirements

  • Must be at least 51% owned by one or more veterans or in the case of any publicly owned business, at least 51% of the stock of which is owned by one or more veterans.

Small Service-Disabled Veteran-Owned Businesses (SDVOB) – eligibility requirements

  • Must have a service-connected disability that has been determined by the Department of Veterans Affairs or Department of Defense
  • The firm must be “small” in its primary industry (NAICS code) in accordance with SBA’s size standards for that NAICS code.
  • Must unconditionally own 51% of the firm
  • Must control the management and daily operations of the firm
  • Must hold the highest officer position in the firm

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Last Modified: July 17, 2014
Please forward all questions about this site to: Barbara Simpson