Your company may now qualify as a small business under the Small Business Administration’s (SBAs) revised size standards. The SBA recently issued 4 final rules to modify revenues-based size standards in 16 industry sectors. These sectors directly tie to 16 North American Industry Classification System (NAICS) sectors and will increase small business eligibility for the SBA’s federal contracting and loan programs for approximately 59,000 businesses. The revised size standards will become effective on May 2, 2022.
This is a big deal for both current and prospective GSA contractors—these size standards updates could open more opportunities for small businesses looking to sell to the federal government and could change the business designation for mid-sized businesses. Let’s break down this update:
What is a Small Business Size Standard?
Before we launch into all the details about this huge update, it’s important you understand what a size standard is and how it fits into federal contracting. Sometimes referred to as NAICS size standards, the SBA’s size standards define the largest size a business can be to participate in government contracting programs and compete in small business set-asides. In other words, size standards simply determine whether a business is considered small in the eyes of the government.
Size standards are calculated using NAICS Codes. Depending on your primary NAICS Code, your business size is determined by the maximum number of employees or average annual receipts. So, if your company falls below the maximum number of employees or average annual receipts outlined by your primary NAICS Code, then you are considered a small business. Thankfully, the SBA has a size standards tool you can use to find out if your business qualifies as small.
How does this tie into the recent news about increasing size standards? If you have previously determined your business size or plan to in the near future, your business size designation could change. Especially if you were on the cusp between small business and “Other than Small Business (OTSB)” before.
Breaking Down the SBA Small Business Size Standards Revisions
As part of the Small Business Jobs Act of 2010, the SBA must review size-standards every 5 years. In March 2022 after its revision, the SBA issued 4 final rules that will increase 229 size standards across 16 different sectors, or better known to the contracting community as NAICS sectors. So, what does this mean for government contractors?
The increase in size standards means approximately 59,000 businesses will have more access to the SBA’s federal contracting and loan programs. The 4 final rules will also create contracting opportunities estimated at $1 billion and extend nearly $45 million worth of 96 7(a) and 504 loans to newly qualified small businesses.
The size standards revisions reflect the SBA’s considerations of relevant data, public comments, and impacts of the ongoing COVID-19 pandemic on small businesses. In response to the pandemic, the SBA will retain current size standards where data has suggested to lower any size standards. The final rules only increase size standards.
Which NAICS Codes Were Modified?
Now to the question everyone is anticipating—does this affect my business? The SBA listed 16 different NAICS sectors (industry sectors) that will increase their size-standards:
- Agriculture, Forestry, Fishing, and Hunting (NAICS Sector 11)
- Mining, Quarrying, and Oil and Gas Extraction (Sector 21)
- Utilities (Sector 22)
- Construction (Sector 23)
- Transportation and Warehousing (NAICS Sector 48-49)
- Information (Sector 51)
- Finance and Insurance (Sector 52)
- Real Estate and Rental and Leasing (Sector 53)
- Professional, Scientific and Technical Services (NAICS Sector 54)
- Management of Companies and Enterprises (Sector 55)
- Administrative and Support and Waste Management and Remediation Services (Sector 56)
- Education Services (NAICS Sector 61)
- Health Care and Social Assistance (Sector 62)
- Arts, Entertainment and Recreation (Sector 71)
- Accommodation and Food Services (Sector 72)
- Other Services (Sector 81)
If your primary NAICS Code falls into one of the sectors above, then your business could be affected by the size standard changes.
Where Can I Find My Primary NAICS Code?
If you are already a GSA contractor, you can find your primary NAICS Code on your GSA eLibrary page or on your SAM.gov profile under your representations and certifications page. If you are not registered in SAM, or have not selected a primary NAICS Code, you should learn more about NAICS Codes and their structure before you choose one.
What Impact Does the Small Business Size Standards Revisions Have on GSA Contractors?
Since 229 small business size standards will be increased across 16 industries, several mid-sized businesses will be able to regain their small business status, and small businesses that are growing will able to keep their designation for longer. Several businesses will also now be able to benefit from the SBA’s procurement and loan programs.
Taking Advantage of Your Small Business Designation
Small businesses have access to myriad tools, programs, and set-aside contracting opportunities to help them succeed in the federal marketplace. If you already qualify as a small business or will under the new size standards, it’s important you learn how to take advantage of all the resources available to you. If you want to learn more about business development, check out our blogs below:
- Tips for Marketing Your GSA Schedule as a Small Business
- Do You Qualify as a Small Business Contractor?
- How to Succeed as a Small Business through a GSA Schedule
If you have any questions about getting a GSA Schedule, or managing your GSA Schedule as a small business, we would be happy to help you.
