SBA adds 2,015 HUBZones

516 more in Puerto Rico

The Small Business Administration removed what it said was an unnecessary requirement in the Historically Underutilized Business Zone (HUBZone) program, allowing for a major expansion of the program. As a result, SBA added 2,015 new HUBZones nationwide, including 516 in Puerto Rico

The SBA recently announced it would no longer apply a 20% population cap when determining which census tracts in a given area would qualify as HUBZones. Under that practice, only the census tracts for 20% of the population of a given metropolitan area were eligible for HUBZones.

The SBA found the cap was put in place by the Department of Housing and Urban Development solely to inform the Internal Revenue Service’s enforcement of the Low-Income Housing Tax Credit.

“Our analysis confirmed that SBA did have the authority to remove the cap and subsequently did so, increasing the number of census tracts becoming HUBZones,” A. John Shoraka, SBA associate administrator of procurement and business development, said at the Sept. 7 hearing of the House Small Business Committee.

In lifting the cap, SBA opened the HUBZone program to many new qualified areas--516 more census tracts in Puerto Rico alone, and 2,015 more nationwide, the SBA said in a recent press release.

Previously, Puerto Rico had 260 HUBZones, and now it has 776.

“Removing the cap has been a priority for the HUBZone community,” Madison Services Group, which advocates for the HUBZone program, said in an emailed statement to Set-Aside Alert.

However, Rep. Steve Chabot, R-OH, chair of the House small business panel, said at the Sept. 7 hearing that the SBA should have consulted the House committee before making the change.

“What makes you think the SBA can take this step without congressional action?” Chabot asked Shoraka at the hearing.

Shoraka said he would defer to the general counsel’s advice.

As of Dec. 31, 2015 there were about 16,500 designated HUBZones and 4,600 certified firms, according to the GAO.

More Information:
Press release http://goo.gl/dbQwBI
Committee hearing: http://goo.gl/utUeu7

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