Small Business Administration Redefines 'Small Business'

New size standards will now classify more than 18,000 additional businesses as "small businesses," making them eligible for SBA programs.

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Size matters: SBA Administrator Karen Mills, seen here with President Obama and Treasury Secretary Tim Geithner, says new size standards will allow the SBA to help more businesses.Small businesses are getting a little bigger, thanks to new size standards from the Small Business Administration. Effective Nov. 5, 2010, the change will make nearly 18,000 more businesses across 70 industries, including retail and hospitality, eligible for SBA programs, including loans and help winning federal contracts.

SBA size standards vary by industry, and caps are typically set based on the number of employees or average annual receipts -- criteria that have been in place since 1984. This recent "comprehensive review" of size standards will at least double the cap on average annual receipts, taking them from $7 million to as much as $35.5 million.

The change is said to benefit car dealers most of all, as they represent nearly one-third of the 18,000 newly deemed "small businesses." Whereas the cap for car dealers used to be revenue-based, the new rule hinges on the number of employees: 200 is the limit. About 90 percent of all car dealerships will now be considered small businesses, some with revenues up to $120 million, according to a report by The New York Times' You're the Boss blog.

"These increases in the size standards mean more of America's small businesses will be eligible for and can access the resources and services the SBA and other federal agencies have available," SBA Administrator Karen Mills said in a statement. The new size guidelines are aligned with current economic and industry indicators and are meant to ensure that small businesses have the tools they need to grow and create jobs, since small businesses have created 65 percent of all the new jobs in the past 17 years and employ half of America's private-sector workforce.

Correction: An earlier version of this story omitted proper attribution to The New York Times.

Tags: federal contracts, government contracts, Karen Mills, News, SBA loans, SBA size standards, Small Business Administration, small business size standards

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