This story appears in the
October 2004 issue of
Entrepreneur.
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The SBA is headed back to the drawing board to make new size
standards for small businesses. Each U.S. industry is assigned a
size standard, which sets the maximum number of employees a firm
can have and still qualify for SBA programs, exclusions from
federal rules, and contracting opportunities. The SBA's first
proposal for changing size standards was released in March. It
would have consolidated current size standards, which are based on
annual receipts, number of employees and other measures, into 10
categories based on employee numbers. (See "Capitol
Issues", June 2004.)
It received a blistering critique from the SBA Office of
Advocacy: "Some small businesses are concerned that adoption
of the proposed size standards will force them to reduce the size
of their work forces to retain their small business
designation." The SBA withdrew the proposal.
Gary Jackson of the SBA Office of Size Standards says the SBA is
starting over and will issue an "advanced notice of proposed
rule making"-the first step in a rule-making process-before
the end of 2004. That's likely to be preceded by public
meetings. (Meeting details will be announced in the Federal
Register.)
The SBA's initial analysis of its March proposal stated
that, as a result of the reduction to 10 size standards, 35,200 new
small businesses would be eligible for federal programs, while
34,100 would lose their small-business designation-a positive net
effect of 1,100 businesses. The Office of Advocacy argued that the
SBA should have quantified the benefits and adverse impacts for
each group and compared them before deciding the proposal was a net
"plus." Stay tuned.
Stephen Barlas is a freelance business reporter who covers
the Washington beat for 15 magazines.