Size standards raised for 57 industries

Affects SBA loans, but not federal contract eligibility

      The Small Business Administration published a final rule to increase size standards for small businesses engaged in the Wholesale Trade and Retail Trade industry sectors.

      Effective on July 14, size standards will increase for 57 NAICS codes in those sectors, comprising 22 NAICS codes with receipts-based standards in Wholesale Trade and 35 NAICS codes with employee-based standards in Retail Trade.

      For small business federal contractors in these sectors, the SBA said the changes will make it easier to obtain certain SBA loans and loan guarantees.

      These standards are not used in federal contracting. By rule, in contracting these size standards are superseded by an across-the-board 500-employee size standard. That is because in federal contracting the Wholesale and Retail Trade sectors are considered manufacturing.

      The changes in the final rule are due to SBA’s required five-year review and analysis of size standards. In its May 2021 proposed rule SBA also said it tweaked the results to account for pandemic stresses.

      “Recognizing the wide-ranging economic impacts of the pandemic, SBA decided not to lower any size standards for which the analysis suggested lowering them,” the final rule explained. Instead, SBA proposed to maintain “as is” status when analytical results supported either a decrease or no change. SBA also proposed increases where supported.

      In the final rule, SBA adopted the guidelines of the May 2021 proposed rule, with the exception of 8 industries in Wholesale Trade. For those 8 industries, SBA is increasing size standards after further refining its analysis.

      Here are the 8 merchant wholesaler industries with the increased standard of 125 employees, up from 100 employees:

• NAICS 423740: Refrigeration Equipment and Supplies;
• NAICS 423820: Farm & Garden Machinery and Equipment;
• NAICS 423840: Industrial Supplies;
• NAICS 423850: Service Establishment Equipment and Supplies;
• NAICS 423930: Recyclable Material;
• NAICS 423940: Jewelry, Watch, Precious Stone, and Precious Metal;
• NAICS 424520: Livestock; and
• NAICS 425110: Business to Business Electronic Markets.

      Overall, the SBA estimates that the new standards will result in 1,694 additional firms qualifying as small in the Retail Trade sectors, and 308 additional firms qualifying as small in the Wholesale Trade sector. That amounts to an addition of 2,002 firms.

      SBA also anticipates the final rule will result in an increase in 7(a), Small Business Investment Co., Certified Investment Co. and Economic Injury Disaster Loan (EIDL) small business loans.

      “SBA believes that all small businesses will benefit from this rule in terms of access to its financial assistance that is available for small businesses,” the final rule states.

More Information:
FedRegister final rule : https://bit.ly/3mXrYxj

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