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Small Business Size Standards Revised by SBA

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By Tanya Roth, Esq. on October 07, 2010 6:59 AM

Small Business owners know that sometimes, less is more. Now, the Small Business Administration has made a decision that will allow those with less to get more. On October 6, new rules will allow changes in small business size standards in the retail, hospitality, restaurant and "other services" industries. This change will make 17,000 more businesses eligible for SBA programs, including loans and preferential treatment for federal contracts.

According to the Washington Business Journal, this change in small business size standards for the service industry is a part of the SBA's new approach in better defining who exactly is considered by the federal government to be a small business. Over the next two years, the SBA will complete its update in the rules, which have not been overhauled since 1980s.

So which businesses will be affected by the upward tick in standards? According the Journal, car dealers will be a major beneficiary of the change in size standards. The standards for dealers will be shifted from a maximum sales-based measurement (previously $29 million in average yearly sales) to an employee based number of 200 workers. The Journal estimates this will make 5,700 more dealerships across the country eligible for the SBA's programs.

The SBA has also adjusted upwards the size standards for hotels, (limited-service) restaurants, cafeterias and food service contractors with the effect of making more than 2,000 businesses in these sectors in into eligible small businesses.

The Small Business Jobs Act has already made many more businesses eligible for SBA loans because it allowed lenders to use an alternative size standard when determining whether a business is eligible for an SBA loan. The Act, working in conjunction with the new rules, will expand the number of small businesses eligible to receive SBA loans.

"These increases in the size standards mean more of America's small businesses will be eligible for and can access the resources and services the SBA and other federal agencies have available," SBA Administrator Karen Mills, told the Journal.

Sometimes, more is just more. More SBA loans will help the economy since they are aimed at helping small business grow. And of course, more small businesses means more jobs.

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