SBA Proposal Would Change Definition Of ‘Small’ Business

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The U.S. Small Business Administration is looking for input from the public on a potential regulation that would change the definition of how “small” some small businesses are. The proposed rule, which would change size standards for firms in two North American Industrial Classification System (NAICS) sectors, would bolster small business eligibility for the administration’s loan programs, according to an announcement.

Retail Trade (Sector 44-45) and Wholesale Trade (Sector 42) are the two NAICS sectors reviewed in the potential regulation. All in, the SBA seeks to bolster size standards for 49 industries in the sectors.

The potential regulation is part of the second five-year in-depth review of small business standards, which is mandated by the Small Business Jobs Act of 2010. According to the SBA, the potential modifications reflect changes in industry conditions and its policy position under the present economic situation due to COVID-19.

If the potential definitions are implemented, the SBA estimates that approximately 1,800 more companies in the sectors would qualify for the SBA’s loan and other U.S. government non-procurement programs. The SBA said that comments on the potential regulation can be submitted online or via mail no later than July 26.

As part of its continuing review of every size standard, the SBA said it usually takes into account the “structural characteristics” of distinct industries such as the intensiveness of rivalry, the average company size and U.S. government contracting trends. “This ensures that small business size standards reflect current economic conditions in those industries,” the SBA said in its announcement.

The potentially larger size standards in the two sectors will enable some mid-sized businesses to reclaim their small business status and will let existing small businesses keep their small business status for a longer timeframe.

PYMNTS reported in April that NCR is teaming up with the SBA to assist its clients in the hospitality industry that are seeking Restaurant Revitalization Fund (RRF) grants. Earlier that month, PYMNTS reported that point-of-sale financial technology firm Toast is teaming up with the SBA to help simplify the application workflow for restaurant industry grants



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