Contractors Note: SBA Changes Size Rules for ‘Small Businesses’

By Carol L. O’Riordan

How large can a business be and still be considered a “small business”? This definition can matter a great deal to a company that wants to benefit from small business preferences, set-asides, and loan programs.

The Small Business Administration (SBA) is the agency that keeps track of such things. Under the law, it must review economic trends from time to time and change the size requirements accordingly.

On September 25, 2012, the SBA increased the maximum size of small businesses in 58 industries in three economic sectors – the Real Estate and Rental and Leasing Sector, the Educational Services Sector, and the Health Care and Social Assistance Sector.

As the SBA said in its release, “New size standards will enable more businesses in these sectors to obtain or retain small business status; will give federal agencies a larger pool of small businesses from which to choose for their procurement programs; and will make more small businesses eligible for SBA’s loan programs.”

The SBA estimates that a total of nearly 19,000 businesses will now qualify as small businesses under its new definitions that were too large to qualify under the old standards.

For example, a company that rents home health care equipment is now a small business if its revenues are under $30 million; previously, it had to be under $7 million. A technical or trade school must be smaller than $14 million rather than $7 million, and a nursing care facility has to be smaller than $25.5 million in revenues instead of $13.5 million.

Any company that wants to submit a bid or proposal for a federal or state contract should keep up with the new size standards and be aware of whether they are “small” or not. It can make a big difference.

Companies that want to participate in small business programs are well advised to seek counsel from law firms that are well versed in the constantly changing requirements for these programs.

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