SBA Adjusts Size Standards to Expand
Lending & Contracting Opportunities
The definition of: what is a small business, just got bigger
HOUSTON – The U.S. Small Business Administration recently issued a rule that will raise size definitions for small business, allowing more businesses to become eligible for the SBA’s loan and contracting programs. SBA is adjusting its industry-specific monetary-based size standards by nearly 8.4% to reflect the inflation that has occurred since the last adjustment for inflation in 2014.
“This is exciting news as it will impact approximately 50,000 small business owners in the Houston/ Galveston Metropolitan Area,” said Houston District Director Tim Jeffcoat. “This will make more than 99% of all businesses now classified as ‘small’, improving their opportunity for SBA loan and contracting programs.”
What does this mean for Texas small businesses? It helps in two ways: First, more businesses that are seeking capital to grow will be able to qualify for the better terms of SBA guaranteed loans. These loans offer longer terms, usually lower interest rates, no collateral requirement by the SBA, no balloon payments, and amounts up to $5.5M.
The second way this helps is more businesses can be eligible for government contracts. Federal certifications (specifically the HUBZone, Women-Owned, Service Disabled Veteran-Owned, and 8(a) certifications) can give a business a huge advantage when competing for lucrative federal contracts.
“This change in size standards can be a game-changer for many businesses, enabling them to access more and better funding sources, and making available new avenues for business growth,” according to Jeffcoat.
Take for example; Logical Innovations Inc., a small business located in Houston. They took advantage of an SBA business development program called 8(a), which is for economically and socially disadvantaged businesses. During the nine years they were in the 8(a) program they won millions of dollars in contracts and expanded to nearly 300 employees in five locations across the U.S.
Also, the SBA is adjusting the revenues-based size standards for agricultural industries, which were previously set by statute. These adjusted size standards will become effective on Aug. 19, 2019 and will be reviewed again as part of the second five-year review of size standards mandated by the Small Business Jobs Act of 2010.
Comments can be submitted on this interim final rule by Sept. 16, 2019, at www.regulations.gov, identified with the following RIN number: RIN 3245-AH17. Interested parties may also mail comments to Khem R. Sharma, Chief, Office of Size Standards, 409 Third St. SW, Mail Code 6530, Washington, DC 20416.
For detailed information on how SBA establishes, reviews, or modifies its size standards, please view the SBA-issued white paper entitled “Size Standards Methodology.” For the latest information about the SBA’s revisions to its small business size standards, please follow its announcements about updating size standards.
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.