Federal Register: October 6, 2010 (Volume 75, Number 193), Page 61604-61609
If that is a bit mind-numbing, the following article from Portfolio.com may help.
To determine eligibility for Federal small business assistance
programs, SBA establishes small business size definitions (referred to
as size standards) for private sector industries in the United States.
SBA's existing size standards use two primary measures of business
size--annual receipts and number of employees. Financial assets,
electric output and refining capacity are used as size measures for a
few specialized industries. In addition, SBA's Small Business
Investment Company (SBIC) and the Certified Development Company (CDC)
Programs determine small business eligibility using either the industry
based size standards or net worth and net income based size standards.
Currently, SBA's size standards consist of 45 different size levels,
covering 1,141 NAICS industries and 17 sub-industry activities. Of
these size levels, 32 are based on average annual receipts, eight
are based on number of employees, and five are based on other measures.
In addition, SBA has established 11 other size standards for its
financial and procurement programs.
Over the years, SBA has received comments that its size standards
have not kept up with changes in the economy and, in particular, that
they do not reflect changes in the Federal contracting marketplace. The
last overall review of size standards occurred during the late 1970s
and early 1980s. Since then, most reviews of size standards have been
limited to in-depth analyses of specific industries in response to
requests from the public and Federal agencies. SBA also makes periodic
inflation adjustments to its monetary based size standards. The latest
inflation adjustment to size standards was published in the Federal
Register on July 18, 2008 (73 FR 41237).
SBA recognizes that changes in industry structure and Federal
marketplace over time have rendered existing size standards for some
industries no longer supportable by current data. Accordingly, SBA has
begun a comprehensive review of its size standards to determine whether
existing size standards have supportable bases relative to the current
data and, where necessary, to make revisions to existing size
standards. Rather than review all size standards at one time, SBA has
taken a more manageable approach to reviewing a group of related
industries within an NAICS Sector. SBA expects to complete its review
of all NAICS Sectors in two years.
In addition, SBA established its ``Size Standards Methodology'' for
reviewing small business size standards and modifying them, where
necessary. SBA published in the October 21, 2009 issue of the Federal
Register (74 FR 53940) a notice of its availability, for public
comments, on its Web site.
In evaluating an industry's size standard, SBA examines the
industry's characteristics (such as average firm size, startup costs,
industry competition and distribution of firms by size), Federal
government contracting trends, impact on SBA financial assistance
programs, and dominance in field of operations. SBA analyzed the
characteristics of each industry in NAICS Sector 72 mostly using a
special tabulation obtained from the U. S. Bureau of the Census from
its 2002 Economic Census (the latest available). SBA also evaluated
Federal contracting trends using the data from the Federal Procurement
Data System--Next Generation (FPDS--NG) for fiscal years 2006-2008.
At the SBA, Size Definitely Matters
The Small Business Administration today made 17,000 additional businesses eligible for its programs, including loans and preferential treatment for federal contracts.
New rules, published in the Federal Register, change the size standards in the retail, hospitality, restaurants and “other services” industries. It’s part of the SBA’s phased, industry-by-industry approach to updating the size standards that are used to determine whether—in the government’s eyes—a firm is a small business.The SBA, however, often sets separate size standards for federal procurement purposes. These also vary from industry to industry. Sometimes a company can qualify as a small business for one type of contract and not qualify as a small business for another type of contract. Defining a small business isn’t as easy as it looks.
These rules were last updated on a comprehensive basis in the 1980s. The SBA expects to complete its new update in two years.
New car dealers will be one of the biggest beneficiaries of the new size standards in retail trade. The SBA is changing its maximum size threshold for new car dealers from $29 million in average annual sales to an employee-based standard of 200 workers. This will make 5,700 more dealers eligible for the government’s small business programs. In all, the SBA increased size standards for 46 industries in retail trade, turning more than 14,400 retail firms into small businesses with the stroke of a pen.
The SBA also increased size standards for hotels, limited-service restaurants, cafeterias and food service contractors, turning more than 2,000 businesses in these industries into small businesses. The hotel size standard jumped to $30 million in annual revenue, up from the previous $7 million. Limited-service restaurants got a smaller bump, from $7 million to $10, while the size limit for food service contractors jumped from $20.5 million to $35.5 million.
Size standards for the catchall “other services” category were increased for 18 industries, including a big jump for industrial launderers from $14 million to $35.5 million. About 1,400 additional firms in this category will qualify as small businesses as a result of these changes. The Small Business Jobs Act, which was signed into law September 27, already made many more businesses eligible for SBA loans. It authorizes lenders to use an alternative size standard when determining whether a business is eligible for an SBA loan.
Instead of using the company’s annual sales or number of employees, lenders can look at the businesses’ tangible net worth and net income to determine its eligibility. Businesses with a tangible net worth of $15 million or under are now eligible for SBA loans as long as their average annual net income after taxes doesn’t exceed $5 million. Larger small businesses also will benefit from a provision in the new law that increases the maximum size of the SBA’s flagship 7(a) from $2 million to $5 million. Size limits for 504 loans, which primarily are used for real estate, also were increased.
Read more: http://www.portfolio.com/views/blogs/capital/2010/10/06/sba-makes-loans-available-to-thousands-of-bigger-firms#ixzz11d4mzBIs
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