What is a Small Business? Here’s How the SBA Defines Small Businesses.

The US Small Businesses Administration defines a small business as a corporate entity with between less than $41.5m in annual revenue and fewer than 1,500 total employees.

The SBA’s definition of a small business depends on the industry the business operates in. The full list can be found here. Here’s the definition of a small business across some popular industries in the US:

IndustryRevenue limitEmployee limit

Convenience Stores$32mN/A

Department Stores$35mN/A

Credit Unions$750 million in assetsN/A

Commercial BakeriesN/A1,000

Music PublishersN/A750

The SBA defines most small businesses by their annual revenue, with fewer industries being defined by total headcount or number of employees. Most of the industries with the employee limits are some form of manufacturing.

Qualifying as a small business can grant preferential tax policies and government support that is available only to small businesses. Small businesses are also eligible for services from the SBA, like a number of available SBA loans and grants.

Small businesses make up the vast majority of businesses in the US. According to the SBA, small businesses account for:

99.9% of all firms in the US
99.7% of US firms with paid employees
97.4% of US exporters (280,496)
46.8% of US private sector employees (61 million)
43.5% of gross domestic product in the US
39.7% of private sector payroll in the US
35.6% of private sector receipts ($13.3 trillion)
31.6% of known export value ($460 billion)

Small businesses are obviously an important part of the American economy. Here are some more fast facts about small businesses in the US:

There are 32,540,953 million small businesses in the US
Last year, there were a record-breaking 5.4m new business applications
Roughly 43% of small businesses apply for a loan when getting started
80% of employer businesses survive the first year; 50% survive at least five years, and 30% survive at least ten years
From 1995 to 2020, small businesses created 12.7 million net new jobs while large businesses created 7.9 million
Women founders make up 18.3% of employer businesses; US veteran founders make up 5.9% of employer businesses

For even more data on small businesses in the US, check out Small Business Statistics Everyone Should Know and How Many Small Businesses Are There in the US?