Glossary · Reading the business
NAICS code(North American Industry Classification System code)
In short
The North American Industry Classification System code is a numerical code classifying businesses by industry. For a buyer, it's crucial because it determines SBA eligibility and size standards for the target business.
What it means in a deal
The SBA uses the primary NAICS code of a business to determine if it meets size standards and is eligible for a 7(a) loan. Verify the business's stated NAICS code during due diligence. Confirm it aligns with the business's actual primary operations and that it doesn't fall under an ineligible business category.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about NAICS code
- How does an incorrect NAICS code on SBA Form 1919 impact 7(a) loan eligibility for a borrower?
- How does the SBA determine if a business is considered "small" for eligibility based on its NAICS code?
- What are the consequences if the NAICS code entered into E-Tran differs from the primary business activity in the loan narrative?
- What is the specific impact if the NAICS code entered into E-Tran differs from the primary business activity described in the loan narrative?
- How does a lender determine if a business is eligible if it earns revenue from multiple NAICS codes?
- How does the SBA handle a loan where the business assets are mostly intellectual property, such as software code?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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