SBA hikes small-business size standards

The Small Business Administration says it has increased its dollar-based small-business size standards to account for inflation, restoring small-business eligibility to those firms that may have lost their small business status because of inflation since February 2002.

The agency has increased its familiar “anchor” size standard from $6 million to $6.5 million. Size standards that are higher than $6 million also reflect similar percentage increases.

SBA size standards are based on receipts, net worth and financial assets. The agency previously adjusted the standards in February 2002, when they were changed for the same reason.

Since the February 2002 inflation adjustment, prices have generally increased 8.7 percent, the SBA said.

The change, said SBA Administrator Hector V. Barreto, “ensure that growing small businesses whose growth has matched the inflation rate will continue to have access to SBA’s financial and contracting assistance programs.”

He said the changes were made “because of the pressing needs that so many small businesses have in the Gulf Coast and in Florida from the recent destructive hurricanes.”

SBA also changed how it determines the size of small-business concerns when firms apply for SBA business loans and for economic injury disaster loans. Instead of looking only at the loan applicant’s primary industry, SBA now looks at both its primary industry and the primary industry of the applicant together with its affiliates. This will provide additional assistance to small businesses that have subsidiaries and affiliates.

SBA also changed procedures for determining size status for the purpose of disaster loan applications for businesses located in disaster areas declared because of hurricanes Katrina, Rita, and Wilma. For an EIDL loan, instead of having to show it was a small business when these hurricanes struck, the firm only has to fit the new small-business size standard when SBA accepts its application for processing.

SBA issued an interim final rule on Dec. 6

The revised size standards for loan programs took effect Dec. 6. For federal procurement, the new size standards become effective on Jan. 5, 2006.

For more information about the standards, visit sba.gov/size.