The definition of "small business" is proposed to change, per the U.S. Small Business Administration. The SBA is looking to increase the revenue-based size definition of small businesses, increasing the limit for annual receipts to $7 million. For more information, read this article from The Street.
What’s "small" in some small businesses should be redefined so more companies can take advantage of federal programs, the U.S. Small Business Administration says.
The proposal, published Wednesday in The Federal Register and available for public comment, looks to expand the revenue-based size definition of small businesses in 36 industries.
The changes would allow some 9,450 additional companies close to exceeding the size threshold for their respective industry keep small-business status and access to federal assistance programs and contracts, according to the SBA.
The agency evaluated 46 industries and three sector sub-industries. The size for the remaining 10 industries and two sub-industries will be retained.
The SBA began reviewing size standards in 2007 and will keep doing so under the requirements of the Small Business Jobs Act of 2010 to bring standards in line with market conditions; before that, the last overall review of size standards was more than a quarter-century ago.
Small-business size definitions for most private sector industries are set with two primary measures of business size — receipts and number of employees — into three so-called anchor size standards applying in most industries: $7 million in average annual receipts for industries that have receipts-based size standards; 500 employees for manufacturing and other industries that have employee-based size; and 100 employees for industries in the wholesale trade sector.
The standards are "neither a minimum nor a maximum," according to the proposal. "It is a common size standard for a large number of industries that have similar economic characteristics and serves as a reference point in evaluating size standards for individual industries."
This article is republished with permission from The Street.