SBA Seeks Comments on Proposed Size Standard Revisions

Changes would Increase Small Business Eligibility for Federal Loan and Contracting Programs

On Dec 2, 2020

The U.S. Small Business Administration is seeking public comments on a proposed rule that would revise the small business size standards for businesses in five North American Industrial Classification System (NAICS) sectors. The federal agency’s proposed actions will increase small business eligibility across 70 different industries, opening them up to participation in the SBA’s robust loan and government contracting programs.

The NAICS sectors reviewed in the proposed rule would affect the following industries: Education Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; and Other Services.

The proposed revisions to the size standards in these sectors, part of a five-year comprehensive review of small business size standards as required under the Small Business Jobs Act of 2010, will enable more small businesses to retain their small business status. Additionally, they will provide federal agencies a larger pool of small businesses to choose from for small business procurement opportunities while also helping eligible small businesses benefit from SBA’s loan programs.

“The SBA’s comprehensive proposals are aimed at making sure that factors determining program eligibility are aligned with current economic and industry indicators. Now more than ever the agency must do it’s part to ensure small businesses have the tools they need to drive economic growth as well as create and retain jobs … all while also simultaneously assisting in the continued recovery from COVID-19,” said SBA Atlantic & Mid-Atlantic Regional Administrator Steve Bulger.

What’s more, the proposals reflect changes in industry and federal marketplace conditions as well as SBA’s policy position under the current economic situation due to the COVID-19 pandemic.  In response to the pandemic, SBA is also retaining current size standards where data suggests that size standards should be lowered.

The following table includes the number of industries reviewed and the number of industries with proposed increases in size standards by NAICS sector:

NAICS Sector	Sector Name	No. of Industries
		Reviewed	with Increases
61	Education Services	18	14
62	Health Care and Social Assistance	39	18
71	Arts, Entertainment and Recreation	25	11
72	Accommodation and Food Services	15	4
81	Other Services	48	23
Total		145	70

SBA estimates that about 4,700 additional firms in these three sectors will become eligible for SBA’s programs under the revised size standards, if adopted.

“Periodically, adjustments to federal government size standards for small businesses are necessary.” said SBA New Jersey District Director Al Titone.  “Updating these size standards to align with current economic conditions, while factoring in increasing small business revenue streams and employment growth will only assure that New Jersey small businesses continue to be eligible and benefit from federal contracting opportunities and loan programs.”

As part of the ongoing review of all size standards, SBA considers the structural characteristics of individual industries, including average firm size, the degree of competition, and federal government contracting trends.  This ensures that small business size standards reflect current economic conditions in those industries.

An SBA-issued White Paper entitled, “SBA’S Size Standards Methodology,” which explains how SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards, can be viewed at http://www.sba.gov/size.

Comments can be submitted on this proposed rule on or before January 26, 2021 at www.regulations.gov, using the following RIN number: RIN 3245-AG88. You may also comment by mail to Khem R. Sharma, Chief, Size Standards Division, 409 3rd Street SW, Mail Code 6530, Washington, D.C., 20416.

For more information about SBA’s revisions to its small business size standards, visit announcements about updating size standards at http://www.sba.gov/size.

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