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To qualify for Federal procurement and a few other programs, businesses are required to register in SAM and to self-certify that they are small at least once annually. First, in response to comments, SBA is not including the 7(a) Loan Program, the Microloan Program, the Intermediary Lending Pilot Program, and the Development Company Loan Program (collectively, the “Business Loan Programs”) in this present change. Created by Congress in 1976, the Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. . documents in the last year, 65 Archived Producer Price Index (PPI) Detailed Report Information Historical records of PPI data, 2005 to current. One trade association commented that “the process for obtaining an SBA loan already requires extensive documentation from a small business, and this additional requirement increases that burden without any underlying benefit to the small business.” The trade association requested that SBA “give consideration to allowing the service-industry size standard calculation to remain at its current 3-year averaging period for the SBA loan guarantee programs.”. . Table 6—Baseline Analysis of Receipts-Based Size Standards. This would be different from how SBA treats the sale or acquisition of a subsidiary. This final rule only would affect the application of SBA's new size standard rules after its effective date. Several commenters also maintained that, with more businesses qualifying as small under the 5-year receipts average, the change also would provide large prime contractors with a robust pool of qualified small businesses to draw from to meet their small business subcontracting requirements. By Joseph Sobota, Assistant Chief Counsel. small business when they see one. SBA agrees with the commenters who stated that the receipts of a sold division remain the receipts of the selling concern after the sale, just as the receipts of an acquired division prior to its acquisition should not be treated as the receipts of the acquiring concern prior to the acquisition. Similarly, it would be confusing to apply SBA's size standards for a business that is engaged in both service- and non-service industries to use a 5-year average for determining small business status in a service industry but switch to a 3-year average for a non-service industry. documents in the last year, 102 should verify the contents of the documents against a final, official SBA has found that reviewing Schedule K is generally not useful, but SBA reserves the ability to request a Schedule K as part of SBA's review of the other Internal Revenue Service (IRS) forms listed in § 121.104(a). 2. First, the agency must propose the size standard with an opportunity for public notice and comment. access). In response to the Proposed Rule, the Office of Advocacy of the SBA (Office of Advocacy) requested that the SBA update its Initial Regulatory Flexibility Analysis (IRFA) to include more relevant alternatives to the proposed regulatory change to mitigate negative impacts on small businesses. (a) SBA amended the General Instructions section to define “concern” and “principal stockholders”; state that separate affiliation rules apply in some of SBA's loan and research programs; remove obsolete information about industries with special size standards; state that dormant or inactive firms must be disclosed; and to include in the certification a statement that accompanying documentation is true and correct. Table 6, “Baseline Analysis of Receipts-Based Size Standards,” below, provides these baseline results. With respect to the comments concerning the implementation timeframe of the final rule, Public Law 115-324 did not include an effective date for the averaging change. on One commenter expressed concerns that the move to the 5-year averaging period lacked benefits for “smaller” small firms that need SBA's assistance the most. SBA received some additional comments that addressed issues which did not fit into any of the above categories. . New Documents ; and (5) What alternatives will allow the Agency to accomplish its regulatory objectives while minimizing the impact on small businesses? One intent of the PPP Loan is to provide economic relief to as many small businesses affected by COVID-19 as possible. procurement opportunities, as expressed in the report accompanying this The SBA’s size standards determine whether or not your business qualifies as small. As described above, this rule may affect small businesses in those industries seeking Federal contracts and assistance under other Federal small business programs.Start Printed Page 66577. The final rule removes “Schedule K” from the definition of receipts. of the issuing agency. A firm that has been in business for less than the averaging period simply annualizes the receipts from its full existence. Under section 3(a)(2)(C)(ii) of the Small Business Act, as amended, an agency without separate statutory authority to issue size standards must satisfy three requirements to prescribe a size standard. Besides set-aside contracting and financial assistance discussed above, small businesses also benefit through reduced fees, less paperwork, and fewer compliance requirements that are available to small businesses through Federal agencies that use SBA's size standards. Thus, until the effective date of a final rule, SBA will continue to apply the 3-year averaging period in the present § 121.104 for calculating average annual receipts for all SBA's receipts-based size standards. In the final implementation in 2002, SBA interpreted section 3(a)(2)(C) as applying only to non-SBA agencies, stating, “Unless a statute specifies size standards for an agency's program or gives an agency direct authority to establish size standards, the agency must use the applicable size standards established by SBA.” However, the Act allows an agency to “prescribe a size standard for categorizing a business concern as a small business concern (see sec. Forty-one commenters responded to this issue, all of which supported using the 5-year averaging period for all SBA's receipt-based size standards. Of those, 3 also recommended using the same averaging period for all receipts-based size standards prescribed by other agencies. of large firms becoming small or/and small firms extending small business status for small business contracts (FPDS-NG), Additional small business dollars available to newly qualified firms or/and current small firms with extended small business status ($ million), Additional small business dollars as % total small business contract dollars in the baseline. The U.S. Small Business Administration (SBA or Agency) is modifying its method for calculating average annual receipts used to prescribe size standards for small businesses. small businesses, they also could adversely affect others. Amend § 121.104 by revising the second sentence of paragraph (a) introductory text and by revising paragraphs (c) and (d)(2) through (4) to read as follows: (a) * * * Generally, receipts are considered “total income” (or in the case of a sole proprietorship “gross income”) plus “cost of goods sold” as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms (such as Form 1120 for corporations; Form 1120S for S corporations; Form 1120, Form 1065 or Form 1040 for LLCs; Form 1065 for partnerships; Form 1040, Schedule F for farms; Form 1040, Schedule C for other sole proprietorships) * * *. (c) In Part II, SBA limited the information requested about employees to businesses that are being evaluated under an employee-based size standard. Accordingly, on December 21, 2018, SBA issued an Information Notice (6000-180023) advising that, until SBA makes necessary changes to its regulations, businesses must report their receipts based on a 3-year average. However, as stated in the June 24, 2019, proposed rule, it could also result in some advanced small businesses having a 5-year receipts average that happens to be higher than the 3-year receipts average, thus ejecting them out of their small business status sooner. 985 of those filers, however, will provide the information under Schedule 14A and 255 of those filers will provide the information under Schedule 14C. To determine eligibility for Federal small business assistance, SBA establishes detailed size definitions for small businesses (usually referred to as “size standards”) that vary from industry to industry reflecting differences among the various industries. documents in the last year, by the Environmental Protection Agency ; (2) What is SBA's description and estimate of the number of small businesses to which the rule will apply? SBA typically uses two primary measures of business size for size standards purposes: (i) Average annual gross receipts for businesses in services, retail trade, agricultural, and construction industries, and (ii) average number of employees for businesses in all manufacturing, most mining and utilities industries, and some transportation, information and research and development (R&D) industries. allowing for a two-year transition period. establishing the XML-based Federal Register as an ACFR-sanctioned daily Federal Register on FederalRegister.gov will remain an unofficial In this Issue, Documents Part 1 was also amended to request ownership information for owners that are entities until the respondent identifies the ultimate owners that are natural persons. If a business has a short year as one of its 5 years, the business calculates its total receipts over the 5-year period, divides by the number of weeks in the short year and its other 4 fiscal years, and multiplies by 52. 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