Analysis: SBA size standards overhaul 'overdue'

Friday - 2/17/2012, 8:04pm EST

Rob Burton, partner, Venable law firm

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The Small Business Administration issued new final rules last week that expand the size standards for small business in 34 industries.

For example, small businesses that provide management-consulting services — previously limited to $7 million in order to be considered small — can now have average revenues over three years of $14 million.

Rob Burton, a partner at Venable law firm and a former deputy administrator at the Office of Federal Procurement Policy, told In Depth with Francis Rose the size standards have not been seriously updated since the early 1980s.

"SBA really was well overdue for a comprehensive review of the size standards," Burton said. "A lot of small businesses feel like they're not small very long because once they get their annual revenue over a certain point, they have to compete with the big guys."

However, the size standards will affect companies differently based on the industry they do business in. Companies in computer-related services will see only a $500,000 increase in annual revenue — from $25 million to $25.5 million.

"Believe me, the IT companies are not happy about this very modest increase," Burton added.

However, not all small-business advocates are cheering the new standards. Some have indicated concern that the new benchmarks could actually crowd out smaller companies with fewer resources.

"My big concern for this ... is those companies that were, for example, in the middle tier of a particular size standard prior to this change ... Effectively are going to get crushed," Guy Timberlake, the co-founder of the American Small Business Coalition told In Depth with Francis Rose earlier this week.

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