High-Risk SIC Codes & Restricted Industrial Classifications

5 min read

While originally developed for federal government agencies, business classification system SIC codes are now also used by credit reporting agencies. So, be not shoot yourself in the foot by choosing a high-risk SIC code when registering your business.


When extending credit, financial institutions like banks and alternative lenders use SIC codes to quickly determine the creditworthy of a specific business. Low-risk industries like car washes and pet stores are more likely to get credit approval while those in a high-risk industry group like travel, banking, or investing are more likely to get denied.

The IRS uses SIC codes as a way to provide a baseline for business incomes within a particular niche. When a company’s revenues do fall outside industry norms, this could trigger an audit. Other government organizations might use SIC classifications to make business comparisons, risks assessments, and economical analysis reports

Statistical data collected by private businesses, especially those who create targeted marketing campaigns might use SIC codes to categorize and prioritize their customer database. Every three years, the Bureau of Labor Statistics SIC codes get updated as they gather new data and revise their detailed reports on workforces, wages, and pricing issues.

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There are 11 primary divisions within the Standard Industrial Classification (SIC) system where each business is categorized within these specific industry groupings.

  • Mining
  • Services
  • Agriculture, forestry, and fishing
  • Construction
  • Insurance, finance, real estate
  • Transportation and public utilities
  • Manufacturing
  • Retail trade
  • Wholesale trade
  • Public administration
  • Non-classifiable establishments


These 11 classifications are then split into sub-divisions that contain 83 two-digit major industry groups, 416 three-digit secondary industry groups, and over 1,000 unique four-digit industries. Once you know how the SIC digits are ordered, it’s quite easy to figure out the divisional branches of any business.

  • 1st & 2nd digits ? Major industry group
  • 3rd digit ? Secondary industry group
  • 4th digit ? Specific industry


There are many SIC code industry classifications that you need to be aware of that can cause major headaches. Restricted industries should be avoided unless you are confident in your business being self-sufficient.

High-risk industries will generally be limited to asset-based funding options, while medium-risk businesses may need to show proof of consistent gross receipts to receive revenue-based loan approval.

Very few of these risky industries will even qualify for startup business loans that are not based on personal credit and guarantees.


Should your SIC code be related to any of these somewhat banned industries, you’ll likely be heavily restrict in your business loan options with most alternative lenders automatically rejecting you.

  • Ammunition or weapons manufacturing
  • Adult entertainment, x-rated products, gaming or gambling activities
  • Banks, federal reserve banks, foreign banks, and bank holding companies
  • City, county, state, and federal governmental agencies
  • Commodity brokers, security brokers, and mutual fund managers
  • Loan brokers, mortgage brokers, mortgage bankers, and mortgage companies
  • Oil trading, energy, petroleum extraction, or production
  • Pawn shops, bail bonds, check cashing agencies, speculative loan services
  • Political campaigns, candidates, or committees

High Risk

Business SIC codes found within these primary industries won’t get you automatically declined for business loans, but it may prove difficult to secure financing if you cannot offer assets as loan security.

Typically, any business whose products or services experience a lot of pricing or market volatility, high-refund rates, or are open to lawsuits would fit into this category.

  1. Travel Agencies
  2. Real estate investing or anything else investing related
  3. Real estate agents/brokers, developers, or land sub-dividers
  4. Auto, recreational vehicle, or boat sales
  5. Mobile or manufactured home sales
  6. Agriculture or forest products
  7. Hotels or motels
  8. Nursing homes, assisted living facilities, continuing care, and retirement centers
  9. Jewelry, precious stones, and metals
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Medium Risk

There is some leeway for businesses that have SIC codes within these medium-risk categories. but loans might also be limited to match current monthly revenues. If you’re able to collect assets like land or equipment, these can be also used to get the financing you need.

Typically, you want to avoid sales-related businesses that are not brick mortar or don’t have residual income streams. Perishable inventory can be problematic, along with sole-proprietors who cannot prove to have steady work.

Any business that is currently profiting, or can show having $5k or more in monthly revenues will be given much wider loan approval consideration.

  • General contractors
  • Long-distance trucking or courier services
  • Taxi cabs and Limousine services
  • Dry cleaners
  • Computer, software, and programming-related services
  • Gas stations or convenience stores
  • Restaurants or drinking establishments
  • Phone sales and direct selling establishments

SIC Types

Do note, that not all SIC codes are created equal, or are even government regulated. The most important is your primary SIC, as choosing this wisely can be the determining factor in whether your business credit applications get easily approved. If you choose a high-risk or restricted industry SIC code it might spell trouble.


The 4-digit primary SIC code denotes a specific industry that you can choose to be at the core of your business. Be very careful when selecting this, as high-risk SIC codes can cause you problems when trying to secure a business loan, while low-risk SIC codes can help pave the way to obtaining loan approval.

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Beyond the primary SIC codethat categorizes a business’s core industry, five secondary SIC codes can be chosen to represent their auxiliary industries. These secondary codes are also allowed to be within or outside their primary industry group.


In 1997, the government attempted to replace four-digit SIC standardized codes with six-digit North American Industry Classification System (NAICS) codes.

NAICS is a new classification system that was literally born out of NAFTA (North American Free Trade Agreement) and was meant to standardize and unify business data collection between the United States, Canada, and Mexico.

Due to a larger geographic scope, many private data organizations added additional SIC classifications to the system, which led to there currently being over 10,000 six-digit NAICS codes. But still, many companies, and the SEC (Security and Exchange Commission), a major government agency, use the old four-digit SIC code system.

Today, most companies in the United States have both a SIC code and a NAICS code.


Many six, seven, and eight-digit SIC codes were created by private data companies, and are not sanctioned by federal government agencies. The private SIC codes are mostly used for identification. assessment, and marketing purposes rather than by lenders.


Below you’ll find our most frequently asked questions about SIC codes including which ones have the lowest and highest risk factors.

1 min read

The Standard Industrial Classification (SIC) code is a numerical tag that categorizes businesses by industry type and niche. It was developed in 1937 to classify different types of US government contracts, so they could categorize business activities, and easily gather statistical data on specific industries within them. Today, the SIC classification system is used on an international scale with many countries and governments including the UK have implemented it.

1 min read

Typically, they are industry classifications that can cause issues when seeking business financing, credit, or loans. Typically, high-risk businesses are those vulnerable to market volatility, lawsuits, weather, and customer refunds.

  1. Investing: Real estate, land development, and stocks
  2. Money: Banks, brokers, check cashing services, and bail bonds
  3. Travel: Agencies, agents, airlines, hotels, and motels
  4. Vehicle Sales: Auto, RVs, recreational, and boats
  5. High-ticket Items: Jewelry, precious stones, and metals
  6. Elder Care: Nursing homes, assisted living, and continuing care facilities
  7. Perishables: Food, agriculture, and livestock
1 min read

Typically, these are profitable businesses that can easily obtain assets, have repeat customers, or sell essential items. Low-risk industries are generally businesses that don’t experience much market volatility and are not in danger of heavy losses, damages, or being sued.

Some of the most lendable SIC code industries include construction, transportation, manufacturing, wholesale, distribution, and medical. As long you can show consistent monthly revenues, brick-and-mortar businesses like bicycle shopscar washesfloristsgift storespet storesphotos studios, and sporting stores would also be considered low risk.

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