Policy

How Big Is Small? The SBA Opens Its Umbrella


How Big Is Small? The SBA Opens Its Umbrella

Photograph by Jerry Young

Many years ago, a government bureaucrat climbed a tall mountain, where great and powerful truths were revealed—in the form of a document (pdf) known as the Small Business Administration’s Table of Small Business Size Standards Matched to North American Industry Classification System Codes.

Well, maybe it didn’t happen exactly like that. The point is that the ancient, metaphysical question—What’s a small business?—has a concrete answer, or answers, at least when it comes to qualifying for federal programs.

As I noted last month: “The SBA considers a casino a small business if it does $7 million or less in annual revenue, unless the casino has a hotel attached, in which case the cap is $30 million. A pet food manufacturer can have 500 employees and be considered a small business, while beer wholesalers graduate out of the category after 100 workers. Power plants are generally evaluated in terms of their annual output in megawatt hours.”

Time changes all things, even government documents. Today the SBA announced it was increasing the size standards for 70 industries, including cotton ginning (from $7 million to $10 million in annual revenue), commercial banking (from $175 million to $500 million in total assets), and racetracks (from $7 million to $35.5 million in annual revenue).

In all, the SBA estimates that the new standards will let about 17,000 more businesses qualify as small—helping them take advantage of federal loan guarantees and qualify for government contracts. Given that upside, it’s no surprise that the public comments on the new regs are overwhelmingly positive: Of 20 comments spread across four industry groups, only one opposed the new standards.

“It seems to me 7 million dollars in business should be the limit for small business. Anything in excess should be taxed and treated like a larger business,” wrote a Florida resident named Pat Perrotta in response to proposed changes in how certain mining companies are classified.

The SBA concluded that “the commenter did not provide any supporting data or analysis for his argument,” and adopted the new size standards.

 

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus