SBA increases some small business size standards

Friday - 2/10/2012, 12:36pm EST

Guy Timberlake, co-founder of the American Small Business Coalition, discussed the new standards on In Depth with Francis Rose

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Small businesses in 34 industries can now earn more money and still be considered small by the government.

The Small Business Administration increased the size standards for a majority of the small businesses in a final rule published in today's federal register. The increase will allow small businesses to grow and still be able to compete as a small business contractor, SBA said.

"SBA took into account the structural characteristics within individual industries, including average firm size, the degree of competition, and federal government contracting trends to ensure that size definitions reflect current economic conditions within those industries," according to an agency release.

See changes by industry.

For instance, small businesses providing administrative management and consulting services now can have revenues that average $14 million over three years. The old size standard was $7 million.

The SBA also increased the size standard for technology companies, up to $25.5 million, from $25 million. SBA says more than 8,350 new firms are now eligible to compete for federal contracts as small businesses under the new size standards.

The last comprehensive review of size standards occurred in the late 1970s and early 1980s, according to the rule.

"SBA recognizes that changes in industry structure and the federal marketplace since the last overall review have rendered existing size standards for some industries no longer supportable by current data," the rule said.

In 2007, SBA began a review of size standards.

The agency received more than 1,400 public comments to the proposed rule.

Most commenters who opposed the rule said the increased size standards would put small firms at a disadvantage of larger companies that could be considered mid-sized or even large businesses.

"That number is about 1.1 percent of the total number of firms in those industries defined as small under the current standards," the rule said.

It added, "SBA estimates that this will increase the small business share of total industry receipts in those industries from about 37 percent under the current size standards to 42 percent."

Some lawmakers in the House Small Business Committee have expressed concern that changing size standards would create an disadvantage for small firms. This week, Reps. Joe Walsh (R-Ill.) and Gerry Connolly (D-Va.) introduced the Protect American Small Businesses Act, which aims to ensure size standards for what defines a small business are appropriate to an industry.

Federal News Radio's Jolie Lee contributed to this story.

(Guy Timberlake, the co-founder and chief visionary officer of the American Small Business Coalition, joined In Depth with Francis Rose to discuss the new size standards. Click "Listen" above to hear the interview. Timberlake also shared his view on the new size standards in a recent blog post.)

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