SBA Announces Increases to Receipts-Based Size Standards

Make sure to check your NAICS code size standards based on receipts, because SBA is increasing them across the board on August 19 to give small businesses more time to grow. On July 18, the SBA announced it will increase monetary-based industry size standards (meaning receipts-based and assets-based size standards). This change is a result of adjustments for inflation that the SBA makes every five years. These rules will go into effect August 19, 2019.

The size standards that will be adjusted include receipts-based size standards for 518 industries and assets-based size standards for 5 industries. As the receipts-based size standards affect many more businesses than the asset-based standards, we’ll focus our discussion on those.

These adjustments are based solely on inflation. SBA calculated that inflation increased 8.37% since the previous inflation adjustment in June 2014. In a separate action, SBA will “review these size standards again in the near future to determine whether further adjustments are needed based on industry and Federal market conditions.”

Below is a summary of the size standards that will increase under this ruling. As you can see, all will be increasing.

As one example, NAICS code 541511 for Custom Computer Programming Services will increase from $27.5 to $30.0 million. For a list of all the new size standards for each individual NAICS code, review the table found in the proposed rule.

SBA is proposing this rule as an interim final rule, making it effective immediately. SBA stated:

good cause exists to publish this rule as an interim final rule. SBA’s rationale for preparing this action as an interim final rule and giving it immediate effect is consistent with the Agency’s statutory obligation to protect the interests of small businesses, thereby enabling them to maintain competitiveness and strengthen the overall economy.

This means that an initial offer with price submitted on or after August 19 will be under the increased size standards. Offers submitted before this date would still be bound by the old size standards.

The increased size standards will allow growing businesses to stay small for a longer period of time and increase the number of small businesses able to compete for small business set-asides. These increased standards will go into effect without a comment period. However, SBA is still seeking comments and may revise the rule based on these comments, so you are encouraged to send in a comment if you feel these increases aren’t accurate.

As Carroll Bernard of Govology pointed out, the SBA included the following language (in red font) advising all companies to update their SAM profiles to account for the new size standards:

Important Notice: Businesses registered in the System for Award Management (SAM.gov) must update their SAM registration in order to have their small business status updated based on the new size standards effective August 19, 2019. Until the SAM registration is updated, the SAM profiles will continue to display the small business status under the old size standards.