Analysis: SBA size standards overhaul ‘overdue’

Rob Burton, partner, Venable law firm

Jack Moore | June 4, 2015 5:37 pm

The Small Business Administration issued new final rules last week that expand the size standards for small business in 34 industries.

For example, small businesses that provide management-consulting services — previously limited to $7 million in order to be considered small — can now have average revenues over three years of $14 million.

Rob Burton, a partner at Venable law firm and a former deputy administrator at the Office of Federal Procurement Policy, told In Depth with Francis Rose the size standards have not been seriously updated since the early 1980s.

Online Chat: Beth Killoran, deputy assistant secretary for Information Technology and chief information officer at HHS, on March 28.

“SBA really was well overdue for a comprehensive review of the size standards,” Burton said. “A lot of small businesses feel like they’re not small very long because once they get their annual revenue over a certain point, they have to compete with the big guys.”

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However, the size standards will affect companies differently based on the industry they do business in. Companies in computer-related services will see only a $500,000 increase in annual revenue — from $25 million to $25.5 million.

“Believe me, the IT companies are not happy about this very modest increase,” Burton added.

However, not all small-business advocates are cheering the new standards. Some have indicated concern that the new benchmarks could actually crowd out smaller companies with fewer resources.

“My big concern for this … is those companies that were, for example, in the middle tier of a particular size standard prior to this change … Effectively are going to get crushed,” Guy Timberlake, the co-founder of the American Small Business Coalition told In Depth with Francis Rose earlier this week.

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