Two years--not one--to count avg number of employees: SBA
Move affects all employee-based SBA size standards;
Also, 5-year or 3-year choice is offered for averaging receipts for size standards for seeking SBA loans
Under a final rule effective July 6, the Small Business Administration is adopting a 24-month average to calculate a business’ number of employees to determine if the firm meets the SBA’s standards to be considered a small business in certain industries. If so, the firm is eligible for federal contracting set-asides and all of SBA’s programs
Previously, businesses were required to use a 12-month average for contracting eligibility. The change was passed by Congress as Section 863 of the national defense authorization for fiscal 2021.
In addition, the SBA is allowing businesses in its Business Loan, Disaster Loan, Surety Bond, and Small Business Investment Company programs to use either a five-year averaging period--or the existing three-year averaging period--for the purposes of calculating average annual receipts. The businesses may choose which averaging period to use. The same choice previously was available for use in federal contracting under a 2019 final rule. However, as of Jan. 6, 2022, receipts-based standards for contracting are all five-year averaged.
The choice of three or five years only applies for loan eligibility, the final rule stated.
In the loan programs, about 5,900 large businesses would gain or regain small business status and more than 61,000 small businesses would have extended small status.
In the contracting programs, about 280 large businesses would gain or regain small status and about 1,200 small businesses would maintain their small size status for a longer time.
More Information:
FedRegister final rule: https://bit.ly/3OaGcXJ
