SBA May Change Definition of 'Small'

The Small Business Administration (SBA) is giving small businesses until July 2 to put in their two cents with regard to the definition of the word “small.” This will effect eligibility for certain types of funding for businesses that meet the new definition.

Eligibility for funding and special contracts from government agencies will be affected by the proposed change. The SBA reports that this will make it easier for more businesses to apply for SBA programs and reduce the costs associated with those programs. The SBA says the main goal of the proposal, issued March 19, was to simplify the current structure.

The proposal recommends that the thirty-seven size standards now employed by SBA, which depend primarily on a business’s annual receipts, be narrowed to a mere 10 size standards, largely based on number of employees.

Thousands of U.S. businesses wait with baited breath to see if their eligibility for SBA loans will be affected. Over 35,200 stand to gain “small business” eligibility under the new definition, though over 34,000 may lose it.

The proposal cites evidence that number of employees is a better indicator of business size than annual receipts because it is less volatile with respect to short-term economic conditions.