SBA Revises Definition of Small Business
The Small Business Administration this week made some 17,000 more businesses eligible for its loans, preferential treatment for federal contracts and other programs.
The businesses now qualify thanks to changes the SBA made to its size definition of "small business" in the retail, hospitality, restaurants and "other services" industries. The changes are part of a multi-year SBA effort to update the rules, which vary from industry to industry and haven't been touched since a late 1970s/early '80s overhaul. The new rules -- which take effect Nov. 5 -- were published in the Federal Register.
"These increases in the size standards mean more of America's small businesses will be eligible for and can access the resources and services the SBA and other federal agencies have available," SBA administrator Karen Mills said. "This comprehensive review is aimed at making sure the factors that determine eligibility are aligned with current economic and industry indicators, and ensure that small businesses across the country have the tools they need to drive economic growth and create jobs."
One of the biggest winners in the expanded definition is new car dealers, an extra 5,700 of whom will now qualify for SBA programs. The definition of "small" for that industry is now not more than 200 workers, as opposed to the previous definition of maximum annual sales of $29 million.
The SBA also revised size standards upwards for 46 industries in the retail trade, making an additional 14,400 boutiques, stationery stores, and other shops qualify. A sample change: paint and wallpaper stores can have up to $25.5 million in annual sales, as opposed to just $7 million. (The SBA originally had plans to shrink the definition of small for 28 industries in the retail trade category, which would end some 4,000 businesses' eligibility. But the agency eventually decided against it.)
Other changes: Size standards increased for hotels, limited-service restaurants, cafeterias and food service contractors, adding some 2,000 businesses to the ranks of the program-eligible. Hotels can now pull in $30 million in annual revenue, up from $7 million under the old rules. Limited-service restaurants can take in $10 million, also up from $7 million. Food service contractors top out at $35.5 million, versus $20.5 million.
Finally, 18 industries in the "other services" category also have new ceilings under the revised rules, making an additional 1,400 businesses "small" by the SBA's definition. The biggest jump: Industrial launderers, who can now have annual sales of $35.5 million, as opposed to the $14 million cut-off from the old rules.
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Inc. contributing editor Courtney Rubin was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.