- More than 58,000 companies are now estimated to qualify as small businesses under a Small Business Administration update to its receipts-based definitions
- The bulk of these firms are classified as agriculture, forestry, fishing, and hunting; mining, quarrying, and oil and gas extraction; utilities; and construction
- The SBA has also made a major expansion of the industries eligible for federal government set-asides under the Women-Owned Small Business Federal Contracting Program
By Dirk Langeveld
Tens of thousands of businesses that were previously considered larger companies will soon qualify as small businesses under revised size definitions issued by the Small Business Administration. The SBA has also announced a major increase in the industries eligible for federal government set-asides under the Women-Owned Small Business Federal Contracting Program.
The SBA outlines the updated rules in four notices published in the Federal Register. Size standards have been increased for 229 industries in 16 sectors, with the changes set to go into effect on May 2.
The SBA uses average annual receipts as one measure to determine whether a company qualifies as a small business and is eligible for federal small business assistance. The number of people employed by the company is also used to make this determination.
Under the Small Business Jobs Act of 2010, the SBA reviews size standards every five years to adjust them for current industry and market conditions. Newly eligible companies can access SBA loan products, the Economic Injury Disaster Loan program, and federal contracting programs aimed at small businesses.
The SBA estimates that approximately 58,500 businesses that were previously not considered small will not meet the definition of a small business under the receipts-based definition. The vast majority, some 49,400 firms, are included in the sectors of agriculture, forestry, fishing, and hunting; mining, quarrying, and oil and gas extraction; utilities; and construction.
The changes are also estimated to create $1 billion in new contracting opportunities for 844 newly qualified businesses, as well as nearly $45 million in accessible funds through 7(a) and 504 loans. Due to ongoing pressures from the COVID-19 pandemic, the SBA is retaining size standards it might have otherwise lowered based on the most current data and public comments, thus preserving loan and contracting opportunities for current qualifying small businesses.
To review specific definitions on the updated size standards, visit the Federal Register notices for the following sectors:
- Transportation and Warehousing, Information, Finance and Insurance, and Real Estate and Rental and Leasing
- Agriculture, Forestry, Fishing and Hunting; Mining, Quarrying, and Oil and Gas Extraction; Utilities; and Construction
- Professional, Scientific and Technical Services; Management of Companies and Enterprises; Administrative and Support and Waste Management and Remediation Services
- Education Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; and Other Services
The SBA plans to issue revisions to size standards in other sectors in the coming months, including manufacturing, retail, and wholesale trade.
The SBA has separately issued an updated list of industries eligible for federal contracting set-asides under its Women-Owned Small Business Federal Contracting Program. This action boosts the number of eligible industries by 70 percent, from 444 to 759.
The update aims to support agencies in allocating set-asides for women-owned small businesses and economically disadvantaged small businesses. The Small Business Act requires the SBA to conduct a study every five years to identify industries in which businesses owned or controlled by women are underrepresented in the federal marketplace.