Small Business Act explained: how the law changed from 1996 to 2026, and what Vaal SMMEs need to know
The 30-year-old law that decides who counts as a small business got new size limits in May 2026. It also created one state agency for small business funding and support, and it promises an Ombud for unpaid invoices. That Ombud is not yet working. Here is what the law does and how it has changed since 1996.
By Staff Reporter · Published
As at 3 November 2026.
- The size rules changed on 27 May 2026. New turnover limits replaced the 2019 table. In most sectors, many businesses that were “small” may now count as “micro”, and many that were “medium” may now count as “small”. Construction goes the other way.1,2,3
- Funding and support now sit in one agency. Seda, sefa and the Co-operative Banks Development Agency were merged into the Small Enterprise Development Finance Agency (Sedfa).4,5
- The Ombud is still on paper. When it is up and running, it should give small businesses a cheaper way than going to court to settle disputes over contract terms and late or non-payment. As at 3 November 2026, we found no announcement that an Ombud had been appointed.5,6,7
What is the “Small Business Act”?
Most people call it the Small Business Act. Its full name is the National Small Enterprise Act, 1996 (Act 102 of 1996). It was passed as the National Small Business Act, and a 2004 amendment renamed it.8,9 Some government notices still use the old name, including the May 2026 size regulations.3
The Act does three main jobs:
- It defines what a small enterprise is. That covers micro, small and medium businesses, including co-operatives.10
- It sets up the state’s support agency. Today that agency is Sedfa.4
- It lets the minister issue guidelines to national, provincial and local government on how to promote small business (section 18).8
The Act does not hand out money on its own. Funds such as the Spaza Shop Support Fund, the Township and Rural Entrepreneurship Programme (TREP) and Sedfa loans run under programmes built on top of it.5
How the law has changed
1996: The original Act. It set up a National Small Business Council and a support agency called Ntsika Enterprise Promotion Agency. Its size table used three tests: employees, turnover and gross asset value.8
2003 (Act 26 of 2003): This amendment took effect on 26 November 2003. It scrapped the National Small Business Council and set up an Advisory Body to speak for small business instead. It also replaced the size table.8
2004 (Act 29 of 2004): This amendment took effect on 15 December 2004. It closed Ntsika and set up the Small Enterprise Development Agency (Seda), which absorbed Ntsika, the National Manufacturing Advisory Centre and other designated institutions. It also renamed the law the National Small Enterprise Act.9,8
2019: The Minister of Small Business Development replaced the size table (Government Notice 399, Gazette 42304, 15 March 2019). It dropped the asset test, folded “very small” into “micro” and raised the turnover limits to allow for inflation since 2003.11
2024 (Act 21 of 2024): The biggest overhaul. The President signed it on 18 July 2024, and it was published on 23 July 2024.12,10 It:
- creates Sedfa as a single agency for financial and non-financial support10
- creates the Office of the Small Enterprise Ombud Service10
- lets the minister ban unfair trading practices against small businesses10
- moves the size test out of the Act and into regulations, which the minister can update “to account for inflation and macro-economic shifts”10,4
2026: Since 27 May 2026, size is set by the minister’s Final Regulations Setting the Criteria Determining the Classification of Micro, Small and Medium Enterprises. They were published in Gazette 54750 on 27 May 2026.2,3
What took effect when
The 2024 Act did not come into force all at once:
| Date | What took effect |
|---|---|
| 1 October 2024 | Most sections, including the new definitions and Sedfa’s establishment (Proclamation 190 of 2024, Gazette 51308)4,13 |
| 1 December 2024 | Section 10(2), which closed Seda, sefa and the Co-operative Banks Development Agency (Proclamation 190 of 2024)13,14 |
| 27 May 2026 | Section 8, which repealed the old size table (Proclamation 314 of 2026, Gazette 54750)1,13 |
| Not commenced | Section 5: the Ombud chapter and the unfair-trading-practice powers. It appears in neither Proclamation 190 of 2024 nor Proclamation 314 of 2026, the only two commencement proclamations we found1,13 |
What we know
- New micro/small/medium thresholds have applied since 27 May 2026, and the old size table has been repealed.1,2,3
- Sedfa replaced Seda, sefa and the Co-operative Banks Development Agency. Those three were closed on 1 December 2024.13,14
What we don’t know
- When the Ombud chapter (section 5) will be brought into force, and when complaint regulations will be published. Nation Watch SA has asked the Department of Small Business Development when section 5 will be brought into force and when the section 17S regulations will be published, and will update this story once it responds.
Read the series
Each of the 2024 changes has its own explainer in this series: the new size limits, the construction cut, Sedfa and the Small Enterprise Ombud. See the links below.
Read more
- Series guide: Vaal small business guide: the Small Business Act and Spaza Shop Support Fund explained
- New SMME size limits explained
- Construction size limits cut: what Vaal builders need to know
- Sedfa explained
- Small Enterprise Ombud explained
- Spaza Shop Support Fund: what you can get and who qualifies
- How to apply for the Spaza Shop Support Fund
- Emfuleni business licence checklist explained
- Spaza fund, TREP, TEPF or Township Enterprise Fund?
- Section 8 of National Small Enterprise Amendment Act in effect, GoLegal / Sabinet (29 May 2026)
- National Small Business Act: micro, small, medium enterprise classification criteria replaced, SA Legal Academy (27 May 2026)
- Final regulations setting the criteria determining the classification of micro, small and medium enterprises, Government Gazette 54750, pp 5–6 (27 May 2026; signed 11 April 2026; scan of the Gazette hosted by a law firm)
- National Small Enterprise Amendment Act: Changes afoot?, Cliffe Dekker Hofmeyr (16 Oct 2024)
- Written reply NW5563, Minister of Small Business Development, Parliamentary Monitoring Group (26 Oct 2026)
- Committee Chairperson welcomes NA’s adoption of committee report recommending candidates for Small Enterprise Ombud appointment, Parliament of South Africa (9 June 2026)
- Portfolio Committee on Small Business Development: BRRR meeting, Parliamentary Monitoring Group (14 Oct 2026)
- National Small Enterprise Act 102 of 1996 (consolidated text and amendment history), LawLibrary
- National Small Business Amendment Act 29 of 2004, gov.za
- National Small Enterprise Amendment Act 21 of 2024 (full text), Government Gazette 50965, gov.za
- Revised Schedule 1 of the National Definition of Small Enterprise (GN 399), Government Gazette 42304, gov.za (15 March 2019)
- National Small Enterprise Amendment Act 21 of 2024 (summary), gov.za
- National Small Enterprise Amendment Act 21 of 2024 (commencement history, including Proclamation 190 of 2024 and Proclamation 314 of 2026), LawLibrary
- Small Enterprise Amendment Act in force soon – except for Ombud chapter, SA Legal Academy (27 Sept 2024)
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