How SBA calculates annual receipts

What counts as receipts

Section 121.104(a) defines receipts as all revenue in whatever form received or accrued from whatever source, including sales of products or services, interest, dividends, rents, royalties, fees or commissions, reduced by returns and allowances. In practice the regulation tells SBA to read your federal income tax return: receipts are generally "total income" (or "gross income" for a sole proprietorship) plus "cost of goods sold" as those terms are reported on the return, and it lists the forms, from Form 1120 and 1120S to Form 1065, 1040 Schedule C and Schedule F. SBA will generally rely on the return and amendments filed on or before the date of self-certification. Where revenue may legally be excluded for tax purposes, SBA does not include it, although it may look at other information if there is a reasonable basis to think the filings are false. When no return was filed for a year in the measurement period, SBA uses books, audited statements or an affidavit.

What is excluded, and what is not

The regulation says the only exclusions are the ones it lists: net capital gains or losses; taxes collected for and remitted to a taxing authority (such as sales tax, but not taxes levied on the firm or its employees); proceeds of transactions between the firm and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. Everything else stays in, and the text names common mistakes: subcontractor costs, reimbursements for purchases a contractor makes at the customer's request, investment income and employee-based costs such as payroll taxes may not be excluded. A prime contractor that passes most revenue to subcontractors still counts all of it.

The period of measurement

Outside the loan, surety and SBIC programs, a concern in business five or more completed fiscal years uses the total of the most recent five completed fiscal years divided by five. A completed fiscal year means a taxable year including a short year, as the IRS defines them. A younger firm takes total receipts for the time in business, divides by the number of weeks in business and multiplies by 52. If a five-year-old firm has a short year inside the window, add the short year and the four full years, divide by the total weeks in those periods and multiply by 52. For the Business Loan programs (7(a), Microloan, Intermediary Lending Pilot and 504), Disaster Loan programs, Surety Bond Guarantee and SBIC, a firm with three or more completed years may choose between the 5-year average and the 3-year average; a firm with fewer than three years annualizes by weeks. The calculator above implements these formulas.

Affiliates

Paragraph (d) adds the average annual receipts of each affiliate to the firm's own. If you acquired an affiliate, or were acquired as one, during the measurement period or before you self-certified, the other firm's receipts count for the entire period of measurement, not only after the affiliation arose. A former affiliate's receipts are excluded for the entire period if affiliation ceased before the size date. Segregable divisions are treated differently: a division acquired during the period is counted only after the acquisition, and one sold during the period continues to be counted. Each affiliate is measured under paragraph (c) even if that means a different period of measurement. See affiliation for who is an affiliate.

Worked example

A firm with five completed fiscal years reports yearly receipts of $1 million, $2 million, $3 million, $4 million and $5 million. The total is $15 million and the average is $3 million. If an affiliate averages $2 million, the combined figure is $5 million. A firm in business for 26 weeks with $600,000 in receipts annualizes to $600,000 / 26 x 52, which is $1.2 million. The calculator reproduces these numbers.

What the rule does not say

This section does not say which size standard applies; that is set by the NAICS code and the table in 121.201, which is large and changes, so look yours up with the size standards lookup or on the eCFR. It does not guarantee that a tax-return figure will be accepted if SBA suspects it is false, and it does not cover employee-based standards, which use headcount (see employee counting).

Sources

• 13 CFR 121.104 (eCFR, issue date 2026-10-29): How does SBA calculate annual receipts? Read November 2, 2026.

Edition read: 13 CFR part 121 as published in the eCFR, current to the issue date October 29, 2026 (read November 2, 2026). Regulations change; check the current eCFR text and the solicitation or loan program rules that govern your situation. This page explains the regulation in plain language and does not replace it. Review needed: business-law YMYL page, not yet reviewed by a qualified professional.