Small Business Size Standards: Monetary-Based Industry Size Standards

SMALL BUSINESS ADMINISTRATION <CFR>13 CFR Part 121</CFR> <RIN>RIN 3245-AI12</RIN> <SUBJECT>Small Business Size Standards: Monetary-Based Industry Size Standards</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> U.S. Small Business Administration. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The U.S. Small Business Administration (SBA or the Agency) proposes to increase its monetary based small business size definitions (commonly referred to as “size standards”) for 263 industries (259 receipts based and four assets based). SBA proposes to retain receipts based size standards for 237 industries and 12 subindustries (“exceptions”) and remove one exception. SBA's proposal relied on its recently revised “Size Standards Methodology” (Revised Methodology). SBA seeks comments on its proposed changes to size standards and data sources it evaluated to develop the proposed size standards. SBA also invites comments on its proposed policy of not lowering any size standards, except for excluding dominant firms from qualifying as small. In accordance with 5 U.S.C. 553(b)(4), a summary of this rule may be found at <E T="03">www.regulations.gov.</E> </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> SBA must receive comments on this proposed rule on or before October 21, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Identify your comments by RIN 3245-AI12 or Docket No. SBA-2025-0102 and submit them by one of the following methods: (1) Federal eRulemaking Portal: <E T="03">www.regulations.gov.</E> Follow the instructions for submitting comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., Chief, Size Standards Division, 409 Third Street SW, Mail Code 6530, Washington, DC 20416. SBA will post all comments on this proposed rule on <E T="03">www.regulations.gov.</E> If you wish to submit confidential business information (CBI) as defined in the User Notice at <E T="03">www.regulations.gov,</E> you must submit such information to U.S. Small Business Administration, Khem R. Sharma, Ph.D., Chief, Size Standards Division, 409 Third Street SW, Mail Code 6530, Washington, DC 20416, or send an email to <E T="03">sizestandards@sba.gov.</E> Highlight the information that you consider to be CBI and explain why you believe SBA should hold this information as confidential. SBA will review your information and determine whether it will make the information public. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Jorge Laboy-Bruno, Ph.D., Economist, Size Standards Division, (202) 205-6618 or <E T="03">sizestandards@sba.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> To determine eligibility for Federal small business assistance, SBA establishes small business size definitions (usually referred to as “size standards”) for private sector industries in the United States. SBA uses two primary measures of business size for size standards purposes: average annual receipts and average number of employees. SBA uses financial assets for certain financial industries and refining capacity, in addition to employees, for the petroleum refining industry to measure business size. In addition, SBA's Small Business Investment Company (SBIC), Certified Development Company (CDC/504), and 7(a) Loan Programs use either the industry based size standards or the tangible net worth and net income based alternative size standard to determine eligibility for those programs. In September 2010, Congress passed the Small Business Jobs Act (Pub. L. 111-240, 124 Stat. 2504 (September 27, 2010)) (Jobs Act) requiring SBA to review all size standards every five years and make necessary adjustments to reflect current industry and market conditions. Section 1831 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328; December 23, 2016) (NDAA 2017) directed SBA to establish size standards for all agricultural enterprises in the same manner as for other industries and to include them in the five-year rolling review procedures established under section 1344(a) of the Jobs Act. In accordance with the Jobs Act, SBA completed the first five-year review of all size standards (except size standards for agricultural enterprises) in 2016  <SU>1</SU> <FTREF/> and the second five-year review of size standards (including size standards for agricultural enterprises in accordance with NDAA 2017) in 2023, <SU>2</SU> <FTREF/> and made appropriate adjustments to size standards for a number of industries to reflect current industry and Federal market conditions. This rule focusing on monetary based size standards is one of two proposed rules as part of the third five-year review of size standards under the Jobs Act. The other proposed rule will focus on employee based size standards and be published in the near future. <FTNT> <SU>1</SU>  See “A REPORT ON THE FIRST FIVE-YEAR COMPREHENSIVE REVIEW OF SMALL BUSINESS SIZE STANDARDS UNDER THE SMALL BUSINESS JOBS ACT OF 2010” available at <E T="03">https://www.sba.gov/sites/default/files/2023-09/Report%20on%20the%20First%205-Year%20Comprehensive%20Size%20Standards%20Review-508F.pdf.</E> </FTNT> <FTNT> <SU>2</SU>  See “A REPORT ON THE SECOND FIVE-YEAR COMPREHENSIVE REVIEW OF SMALL BUSINESS SIZE STANDARDS UNDER THE SMALL BUSINESS JOBS ACT OF 2010”, available at <E T="03">https://www.sba.gov/sites/default/files/2023-07/SBA%27s%20Report%20on%20the%20Second%205%20Year%20Review%20of%20Size%20Standards_Final.pdf.</E> </FTNT> The number of monetary based size standards reviewed and revised by NAICS sector during the first five-year comprehensive review of size standards under the Jobs Act were discussed in the receipts based size standards proposed rules SBA issued as part of the second five-year comprehensive review of size standards. <SU>3</SU> <FTREF/> During the second five-year review of size standards under the Jobs Act, SBA reviewed a total of 534 monetary based size standards and increased 264. <FTNT> <SU>3</SU>  See Small Business Size Standards: Agriculture, Forestry, Fishing and Hunting, Mining, Quarrying, and Oil and Gas Extraction, Utilities, Construction (85 FR 62239, October 2, 2020), Small Business Size Standards: Transportation and Warehousing, Information, Finance and Insurance, Real Estate and Rental and Leasing (85 FR 62372, October 2, 2020), Small Business Size Standards: Professional, Scientific and Technical Services, Management of Companies and Enterprises, Administrative and Support and Waste Management and Remediation Services (85 FR 72584, November 13, 2020), Small Business Size Standards: Education Services, Health Care and Social Assistance, Arts, Entertainment and Recreation, Accommodation and Food Services, Other Services (85 FR 76390, November 27, 2020), and Small Business Size Standards: Wholesale Trade and Retail Trade (86 FR 28012, May 25, 2021). </FTNT> The analysis of available data at that time suggested that a total of 237 size standards might be decreased, but in response to ongoing economic impacts as a result of the COVID-19 pandemic, SBA decided to retain those size standards at the current levels. <SU>4</SU> <FTREF/> Table 1, Summary of Monetary Based Size Standards Reviewed in Second Five-Year Review (NAICS 2017), provides a summary of these revisions by NAICS sector. <FTNT> <SU>4</SU>  See Small Business Size Standards: Agriculture, Forestry, Fishing and Hunting, Mining, Quarrying, and Oil and Gas Extraction, Utilities, Construction (87 FR 18607, March 31, 2022), Small Business Size Standards: Transportation and Warehousing, Information, Finance and Insurance, Real Estate and Rental and Leasing (87 FR 18627, March 31, 2022), Small Business Size Standards: Professional, Scientific and Technical Services, Management of Companies and Enterprises, Administrative and Support and Waste Management and Remediation Services (87 FR 18665, March 31, 2022), Small Business Size Standards: Education Services, Health Care and Social Assistance, Arts, Entertainment and Recreation, Accommodation and Food Services, Other Services (87 FR 18646, March 31, 2022), and Small Business Size Standards: Wholesale Trade and Retail Trade (87 FR 35869, June 14, 2022). </FTNT> Currently, there are 102 different size standards levels, covering 978 NAICS industries and 18 subindustries (commonly known as “exceptions” in SBA's table of size standards). Seventy-three of these size levels are based on average annual receipts covering 496 industries and 13 subindustries (“exceptions”), 27 are based on average number of employees covering 478 industries and five subindustries (“exceptions”), one is based on refining capacity covering one industry, and one is based on average assets covering four industries. <GPH SPAN="3" DEEP="630"> <GID>EP22AU25.000</GID> </GPH> <GPH SPAN="1" DEEP="630"> <GID>EP22AU25.001</GID> </GPH> SBA also adjusts its monetary based size standards for inflation at least once every five years. An interim final rule on SBA's latest inflation adjustment to size standards, effective December 19, 2022, was published in the <E T="04">Federal Register</E> on November 17, 2022 (87 FR 69118), which SBA finalized on July 19, 2023, adopting the November 2022 interim rule (88 FR 46048). SBA also updates its size standards, every five years, to adopt the Office of Management and Budget's (OMB) quinquennial NAICS revisions to its table of small business size standards. Effective October 1, 2022, SBA adopted the OMB's 2022 NAICS revisions to its size standards (87 FR 59240, September 29, 2022). This proposed rule is one of the two proposed rules that will review size standards of industries grouped by the type of size standards measures, <E T="03">i.e.,</E> monetary based size standards and employee based size standards. Rather than review all size standards in one rul ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 260k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━