SBA’s Plans For New Rules in 2021 and Beyond

SBA has issued its regulatory agenda for what rules it plans to roll out later this year. Here is a rundown of the key rules.

SBA recently released its semiannual Regulatory Agenda, which is a summary of current and projected regulatory actions, and invited the public to comment. Below, I summarize some of the key proposals.

Alternative Size Standards for Loans. SBA has proposed “an alternative size standard for loan applicants that do not meet the small business size standards for their industries.” Congress in 2010 established an alternative size standard for loan programs, which was a maximum of $15 million in tangible net worth and $5 million in average net income. Now (only 11 years later), it is on SBA’s to-do list to establish an alternative size standard. Note: this alternative size standard does not apply to size purposes for federal contracts, only for loans. A proposed rule is expected May 2021.

Size Standards Updates for Certain Sectors. SBA is reviewing size standards for a number of industries.

  • Agriculture, Forestry; Mining, Oil and Gas Extraction; Utilities; Construction; Transportation; Information; Finance and Insurance; and Real Estate and Rental and Leasing: if you are in one of these industries, be on the lookout for SBA to increase (or possibly decrease) size standards for these areas. The final rule is expected in September 2021.
  • In addition, SBA will update size standards for certain sectors in July 2021, including Professional, Scientific and Technical Services; Management of Companies; and Administrative and Support, Waste Management and Remediation Services.
  • Manufacturing and Wholesale Trade and Retail Trade: proposed rule expected in May 2021.
  • Educational Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; Other Services: final rule expected October 2021.
  • Monetary Size Standards: will be adjusted for inflation with a final rule expected May 2021.

Credit for Lower Tier Subcontracting. The 2020 NDAA requires SBA to alter the method and means of accounting for lower tier small business subcontracting. SBA is still in the early stages of implementing this change so they provided no real details, and notes that there is no legal deadline.

Small Business Timber Set-Aside Program. SBA is considering adjusting how standards for this program should be calculated. A Final Rule is expected November 2021 (I have to admit this is not a program I was familiar with).

Small Business Size Standards: Runway Extension Act for Loan Programs: SBA is considering how to apply The Small Business Runway Extension Act–changing the look-back period from three to five years for receipts-based size standards–to size standards for in SBA’s business loan, disaster loan, and SBIC programs, with a proposed rule expected November 2021.

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These proposed rules don’t feel quite as important as the big slate of rules changes that SBA has implemented over the past few months, such as mentor-protégé consolidation. But these are still important updates. Stay tuned to SmallGovCon for our discussion of how SBA implements these rules.

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