Enhancements Will Provide Increased Flexibility on Size Determinations and Calculating Average Annual Revenues for Small Business Contractors Changes Estimated to Expand Access to SBA Loans to Over 67,000 Businesses
The U.S. Small Business Administration issued a proposal to modify two of the methods it uses to determine which businesses qualify as a small business for government contracts and SBA’s loan and investment programs. The proposed modifications would extend the averaging period for calculating a small business’s number of employees. The proposal also would change how the average annual revenues may be calculated for SBA’s loan and investment programs.
Specifically, the proposed changes would modify the averaging period for calculating a small business’s number of employees, increasing it from 12 months to 24 months and applying the change to all of SBA’s programs. In addition, the proposed changes would also give small businesses participating in SBA’s loan programs and Small Business Investment Company (SBIC) Programs the option to choose between the new five-year averaging period or the existing three-year averaging period for the purposes of calculating average annual revenues.
SBA estimates that, as a result of these proposed changes, about 67,650 additional businesses will gain access to SBA’s loan programs and about 450 additional businesses will gain access to SBA’s contracting programs.
The public is invited to submit comment on the proposed rule on or before Dec. 2, 2021. Submissions may be submitted at www.regulations.gov or via FederalRegister.gov and identified by the following RIN number: RIN 3245-AH26. Comments will also be accepted by mail directed to Khem R. Sharma, Chief, Office of Size Standards, 409 3rd Street SW, Mail Code 6530, Washington, D.C. 20416.
Background on the SBA’s Size Standard Modifications
The proposed changes are based on two recently passed acts. The first is the January 1, 2021, passage of the National Defense Authorization Act for Fiscal Year 2021 (“NDAA”), Public Law 116-283 (section 863), which changed the averaging period for SBA’s employee-based size standards from 12 months to 24 months. The second is the passage of the Small Business Runway Extension Act of 2018 (“SBREA”), Public Law No.115-324, which changed the requirements for proposed size standards prescribed by an agency without separate statutory authority to issue size standards. This law changed the averaging period for calculating average annual revenues of services for businesses from three years to five years.
For more information about SBA’s Office of Size Standards and revisions to its small business size standards for industry sectors, please visit http://www.sba.gov/size.
Article courtesy of SBA.