Alert
Alert
04.27.22
As we discussed in client alerts published in November 2020 and earlier this month, under the Small Business Jobs Act of 2010, the U.S. Small Business Administration (SBA) is required every five years to review the existing size standards and make necessary adjustments to reflect current industry and market conditions. Rather than review all of the more than 1,000 North American Industrial Classification System (NAICS) code standards at one time, the SBA spreads its effort over the five-year period, evaluating several industry sectors at a time.
On April 26, 2022, the SBA issued a proposed rule that covers 432 industries, all of those industries with employee-based size standards. Among the proposed changes, the SBA proposed to increase the size standards for 150 industries. Because of continuing concerns about the COVID-19 pandemic’s impact on economic conditions, the SBA did not propose to reduce the size standards for any of the remaining 282 industries.
The proposed rule would increase the size standards for 150 industries, including 10 industries in NAICS Code Sector 21 (Mining, Quarrying, and Oil and Gas Extraction), 10 industries in Sector 22 (Utilities), 120 industries in Sectors 31-33 (Manufacturing), five industries in Sectors 48-49 (Transportation and Warehousing), three industries in Sector 51 (Information), one industry in Sector 54 (Professional, Scientific and Technical Services), and one in the “Other Sector” industries (Agriculture, Forestry, Fishing and Hunting; Finance and Insurance; Administrative and Support, Waste Management and Remediation Services).
This proposed rule would provide size standard increases of 50 percent or more for 17 of the 150 industries and increases of at least 20 percent for an additional 60 industries. For these 150 industries, the average size standard increase was roughly 175 employees per industry.
If the proposed rule is finalized, these employee-based size standard adjustments will significantly impact the small businesses in these 150 industries. Many businesses that have recently outgrown their applicable size standard may qualify again as small businesses under the increased size standards. Also, many small businesses may be able to continue to qualify as small for longer periods under the increased size standards. Comments on the proposed rule are due by June 27, 2022.