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On November 17, 2022, the U.S. Small Business Administration (SBA) Office of Size Standards published a rule (87 FR 69118) which finalizes without change, the 2019 interim final rule (RIN 3245-AH17 or 84 FR 34261) which adjusted monetary-based industry size standards (i.e., receipts- and assets-based) for inflation that occurred since 2014.
The rule also includes three interim final actions.
- First, SBA adds an additional 13.65 percent inflation increase to the monetary small business size standards, which have been recently adjusted as part of the second five-year review of size standards pursuant to the Small Business Jobs Act of 2010 (Jobs Act). This concurrent additional adjustment accounts for the inflation that has occurred since 2019 that has not been adequately addressed by the Agency’s previous adjustments to its small business size standards under the Jobs Act.
- Second, this rulemaking adjusts program specific monetary size standards to account for inflation, including the alternate size standard based on tangible net worth and net income for the Small Business Investment Company (SBIC) program. This change would increase the tangible net worth test from $19.5 million to $24 million and the average net income after Federal income taxes test from $6.5 million to $8 million.
- Third, SBA adjusts for inflation the economic disadvantage thresholds applicable to the 8(a) Business Development and Economically Disadvantaged Women-Owned Small Business (EDWOSB) programs, and the dollar limit for combined total 8(a) contracts.
Although SBA is seeking comments on the above interim final rule provisions, with comments due January 17, 2023, the effective date for this interim final rule is December 19, 2022. SBA is currently modifying SBA Form 480 (Size Status Declaration) to incorporate the regulatory changes. Until that time, please make appropriate notations in the form to accommodate.
If you have any questions regarding this regulatory change, please contact your financial analyst.
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