SBA proposes change in definition of small business

WASHINGTON — Proposed rules published for comment in The Federal Register by the U.S. Small Business Administration would adjust the size definition of small businesses in 52 industries in two broad categories of businesses, ranging from travel agencies and movie production to waste management.

The proposed adjustments to size standards in 15 industries in Sector 51 of the North American Industry Classification System (NAICS), “Information,” and in 37 industries in Sector 56, “Administrative and Support, Waste Management and Remediation Services,” reflect changes in marketplace conditions in those sectors, according to the SBA

In both sectors, the proposed changes are based on annual gross revenues. The standards delineate how large a business can be and still qualify as small for federal government programs. The dollar limits refer to annual revenues averaged over three years.

As part of the ongoing comprehensive review of all size standards that began in 2007, the SBA said it evaluated all industries in these sectors that have revenue-based size standards to determine whether the existing size standards should be adjusted. Before 2007, the last overall review of size standards occurred more than 25 years ago. Under provisions in the Small Business Jobs Act of 2010, SBA will continue its comprehensive review of all size standards for several years.

The proposed changes take into account the structural characteristics within individual industries, including average firm size, degree of competition, and federal government contracting trends. This is aimed at ensuring that size definitions reflect current economic conditions within those industries.

The upward revisions would allow some small businesses that are close to exceeding their current size standards to retain small business eligibility under the proposed higher size standards, and give federal agencies a larger selection of small businesses to choose from for small business procurement opportunities. They also would allow more small businesses to qualify for SBA financial assistance.  SBA estimates that up to 500 more firms in Sector 51 and 2,700 more companies in Sector 56 will qualify for SBA assistance and other federal programs if the proposed revisions are adopted.

An SBA White Paper titled “Size Standards Methodology” was issued Oct. 21, 2009, explaining how SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards. It is available for viewing at www.sba.gov/size.

Interested parties can submit comments on these proposed rules on or before Dec. 12, 2011. The SBA recommends that comments be submitted online at www.regulations.gov or mailed to Khem R. Sharma, Chief, Size Standards Division, 409 3rd St., SW, Mail Code 6530, Washington, D.C. 20416. The SBA will post all comments to www.regulations.gov for public review. The SBA does not accept comments submitted by email.

For more information about SBA’s revisions to its small business size standards, click on “What’s New with Size Standards” on SBA’s website at www.sba.gov/size.

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