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Small Business Size Standards Under Revision

on December 08, 2009 Source: Policy Dialogue on Entrepreneurship

After 25 years, the U.S. Small Business Administration (SBA) is considering revising the definitions of “small business”.

The current broad definition of small business covers businesses with 500 or fewer employees, but the exact definition depends on the type of industry. Comments for the three specific size standard proposals are due on December 21, 2009:

-    Proposed Size Standard for Accommodation and Food Service Industries
-    Proposed Size Standard for Retail Trade
-    Proposed Size Standard for “other services

You can find all the definitions here. The SBA produced a White Paper, "Size Standards Methodology",  which includes an explanation of current size standards and a policy section where the SBA requests comments on several policy issues related to size standards (e.g., Should there be one uniform definition?  Should size standards be lowered?).

Tom Sullivan, former Chief of Advocacy at the SBA and currently head of the Small Business Coalition for Regulatory Relief (SBCRR) at Nelson Mullins, issued the following commentary on the SBA's White Paper for SBCRR members:

“The regulatory flexibility analysis does a good job promoting the proposed changes.  As such, it is a data-driven advocacy exercise to promote some benefits of the proposed changes.  However, the analysis stops short of explaining what small businesses lose out under changes to the size standards.  It is acknowledged by SBA that every change to SBA size standards creates winners and losers.  The regulatory flexibility analysis in each of the 3 proposed changes lays out in detail how a number of small businesses are "winners," but does not describe how some small businesses will have a lower percentage chance of receiving federal preferences because they will be competing with a larger pool of small businesses for federal assistance.  Data that would aid SBA's acknowledgement of the "losers" in SBA's proposed size changes would benefit SBA's final determinations.”

Category:  Capitol Hill 

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