What Are NAICS Codes?
NAICS stands for North American Industry Classification System.It’s a six‑digit code assigned to every type of business activity in the U.S., Canada, and Mexico.
The government uses these codes to track economic data, enforce regulations, and set eligibility criteria for things like SBA programs. For example, when you apply for federal contracts or a small business loan, agencies use your NAICS code to determine whether you qualify as a “small business” under specific NAICS size standards.
Pro Tip 💡: Your NAICS code isn’t just for forms—it can influence which opportunities you can access. Picking the right code is crucial for compliance and growth.
Why Do NAICS Codes Exist?
Before 1997, the U.S. used Standard Industrial Classification (SIC) codes. While helpful, SIC codes became outdated and didn’t capture emerging industries like software development or e‑commerce. NAICS was introduced to modernize the system, creating more precise categories and making data comparable across North America.
Now, instead of being limited to four digits under SIC, businesses have six-digit NAICS codes, which offer much finer detail.
How to Find NAICS Codes for Your Business
If you’re unsure of your NAICS code, don’t worry—it’s easy to look up.
Here’s how to find NAICS codes:
Visit the official NAICS website or the U.S. Census Bureau’s NAICS search tool.
Enter a keyword that describes your business (e.g., “restaurant,” “IT consulting,” “construction”).
Browse through the results to see which code best matches your primary activity.
You can also look at competitors or similar businesses to see which codes they use. Many government databases allow you to search by company name to see their classification.
Pro Tip 💡: If your business offers multiple services, choose the NAICS code that represents your largest revenue stream or core business activity.
NAICS Codes vs. SIC Codes
If you’ve been in business a while, you might still see references to SIC and NAICS codes side by side. Here’s the difference:
Many databases still list both, so don’t be alarmed if you see both on forms. However, the federal government primarily relies on NAICS today.
Why NAICS Size Standards Matter
When you apply for an SBA loan, government contract, or certain grants, the agency checks your size against NAICS size standards.
These standards define what counts as a “small business” for each industry. For example, a construction company might qualify as small if it has under $39.5 million in average annual receipts, while a manufacturing business might be measured by employee headcount.
Knowing your NAICS code allows you to look up the exact size standard for your industry. This can be the difference between qualifying for special programs or being considered “too large.”
Pro Tip 💡: Before bidding on a government contract, review the SBA’s current Table of Small Business Size Standards to see if your business qualifies.
How NAICS Codes Affect Funding and Compliance
Many lenders and agencies use your NAICS code to assess risk and compliance. For example:
SBA Loans: Your code confirms eligibility under NAICS size standards.
Grants: Certain grants are industry‑specific, and your NAICS code shows you’re in the right sector.
Permits and Licensing: Some states and localities use NAICS codes to determine licensing fees or tax rates.
NAICS Code List: Popular Examples
Here are a few entries from the NAICS code list to give you an idea:
541611 – Administrative Management and General Management Consulting Services
722511 – Full-Service Restaurants
236220 – Commercial and Institutional Building Construction
454110 – Electronic Shopping and Mail-Order Houses
Pro Tip 💡: Don’t rely on guesswork—use the official NAICS search to find the exact match for your primary business activity.
How NAICS Codes Impact Market Research
Beyond compliance, your NAICS code is a powerful tool for competitive analysis. Many databases, like the U.S. Census and industry‑specific trade groups, allow you to pull data by NAICS code.
You can use it to:
Benchmark your revenue against industry averages
Identify competitors in your exact niche
Research growth trends before expanding or pivoting
Common Mistakes When Choosing a NAICS Code
Picking a Broad Code: Choosing something too generic can limit your access to industry‑specific benefits.
Using an Old SIC Code: Make sure you’re using the updated NAICS version.
Failing to Update: If your business evolves, update your NAICS code so it reflects your current main activity.
Why NAICS Codes Are a Big Deal for SBA Loans
If you’re exploring funding, particularly SBA 7(a) loans or microloans, your NAICS code is front and center. SBA uses it to determine:
Whether you meet NAICS size standards
If your industry is eligible for specific programs
How your business is compared to peers for underwriting
Pro Tip 💡: Before applying for financing, double‑check your NAICS code in the SBA’s online table of size standards to make sure you qualify as a small business.
SIC and NAICS Codes in Legacy Systems
Many older applications or industry databases still ask for both a SIC and NAICS code. It’s smart to have both handy. For conversions between systems, check the NAICS/SIC Crosswalk published by the Census Bureau.
