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:
|Industry||Revenue limit||Employee limit|
|Credit Unions||$750 million in assets||N/A|
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