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Federal Market Intelligence for Small Business |
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SBA reverses on HUBZonesIt is an awkward situation when a federal agency appears to reverse a recent regulation. That is what happened at the Small Business Administration with regard to office locations for some HUBZone companies, according to the PilieroMazza PLLC law firm. The Small Business Administration recently pivoted on an earlier regulation affecting HUBZone firms that wished to enter into long leases to maintain HUBZone eligibility. Many HUBZones are expected to lose eligibility once the 2020 Census is completed. HUBZone firms can remain eligible for several years as those zones are “redesignated.” A 2019 regulation also offered an option to those firms to remain eligible for 10 years if they own their office or enter into a long-term lease at the time of the firm’s initial certification or an annual recertification. The regulation generally does not apply for already redesignated areas. “However, if your redesignated area is considered a qualified disaster area (QDA), this will allow you to use the 10-year rule if you own your office or make a long-term investment this year,” PilieroMazza told clients in January. Many redesignated HUBZone areas qualify as QDAs because of COVID or a natural disaster. On April 15, PilieroMazza issued a new alert: “Surprisingly, SBA recently changed its mind about QDAs and is now taking the position that a firm located in a redesignated area that is also a QDA cannot take advantage of the 10-year rule for its principal office.” SBA is expected to issue new guidance soon, the law firm said. Some firms may need to petition SBA to make an exception. SBA officials were not immediately available.
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