How SIC & NAICS Codes Decide Whether Your Business Is High, Moderate or Low Risk

SIC is the older four-digit Standard Industrial Classification system. NAICS, the North American Industry Classification System, replaced it in 1997 with more digits and better coverage of modern industries. Comparing SIC code vs NAICS, both describe what a business does, but they use different structures.

SIC remains embedded in government reporting, and D&B SIC codes are reported and sold to federal agencies. Because SIC is what many of those agencies use, every D&B SIC code continues to drive how businesses are described and scored, even though NAICS is newer.

Yes. Industry classification is one of the first filters applied. A code that sits in a high risk business industries or cash-intensive category, including many high risk SIC codes and high risk NAICS codes, can lead to a high-risk designation before any financial information is reviewed.

Traditionally low risk business industries include agriculture, educational services, fishing, forestry, healthcare, hunting, information, management of companies, mining, social assistance and utilities. This low risk industries list is also where you’ll find most low risk NAICS codes.

Commonly flagged high risk business industries for credit include auto and boat dealers, casinos, check cashing, consumer loans, convenience stores, currency exchange, jewelry, laundromats, liquor stores, money transmitters, pawn shops, private ATMs, real estate, restaurants, retail, tobacco distribution, transportation and warehousing, travel agencies, vending and wholesale trade, many of which map to NAICS high risk codes.

Revenue that arrives as cash is difficult to verify from outside the business. Because reported income cannot be corroborated through banking and trade data, bureaus and lenders apply additional caution to these high risk business industries.

A risk recommendation may not be produced. D&B notes that a low, moderate or high risk recommendation cannot be created when there is not enough information to match the business to its limit matrix, including when there is no industry classification.

You can request a correction so the record reflects your actual SIC code line of business, supported by documentation. You should never select a code that misdescribes the business in order to appear lower risk, even if it seems like one of the best SIC codes for business credit, accuracy always outweighs a favorable-looking classification.

It can. When the industry reported to tax authorities does not match what data providers have collected in your D&B SIC code record, discrepancies can prompt verification or review.

No. An aged corporation or LLC can support formation history and credibility, but industry classification is determined by the activity the business conducts. Age does not move an industry out of a high-risk category.

Risk management and related consulting activities typically fall under risk management NAICS code 561621, or the broader Professional, Scientific and Technical Services sector. This sector is generally treated as moderate risk, revenue can be cyclical or project-based, but it’s usually verifiable through contracts and invoicing.

No, an LLC’s name has no bearing on its risk classification. Bureaus and lenders assign risk based on the SIC or NAICS code tied to your actual business activity, not the entity name. Concerns about high risk LLC names are largely a misconception: a business named “XYZ Holdings LLC” and one named “XYZ Pawn Shop LLC” are classified identically if they carry the same industry code.