When is the Size of Your Business Determined for SBA Purposes?

By: Danielle Dietrich

If you are a business owner who is interested in applying for SBA financial assistance or participating in SBA programs such as the 8(a) Business Development Program, HUBZone, WOSB, EDWOSB, VOSB, or SDVOSB, you may be wondering when the size status of your business concern is determined. The size status of a business concern is important because it affects your eligibility for various SBA benefits and opportunities. Depending on the type of assistance or program you are seeking, the size status of your business concern may be determined at different points in time. Here are some examples of when the size status of your business concern is determined for different SBA purposes.

• For SBA Business Loans and for Disaster Loans (other than physical disaster loans), the size status of your business concern is determined as of the date the application for financial assistance is accepted for processing by SBA. This means that you must meet the applicable size standards for your primary industry at the time you submit your application to SBA.
• For the Development Company programs, you have two options to qualify as a small business concern. You can either meet the same standards as mentioned above, or you can meet an alternative standard based on your tangible net worth and average net income. The size status of your business concern is determined as of the date the application for financial assistance is accepted for processing by SBA, using either of these standards.
• For the Small Business Investment Company (SBIC) program, you also have two options to qualify as a small business concern. You can either meet the same standards as mentioned above, or you can meet an alternative standard based on your tangible net worth and average net income. The size status of your business concern is determined as of the date of the SBIC's initial investment in your business, using either of these standards.
• For Surety Bond Guarantee assistance, the size status of your business concern is determined by the size standard for the primary industry in which your business concern, combined with its affiliates, is engaged. This means that you must meet the applicable size standard for your primary industry at the time you apply for a surety bond guarantee from SBA.
• For the 8(a) Business Development (BD) program, the size status of your business concern is determined by the size standard corresponding to your primary industry classification. This means that you must meet the applicable size standard for your primary industry at the time you apply for admission to the program. Additionally, the size status of your business concern is determined by the size standard corresponding to the NAICS code assigned to each individual sole source 8(a) contract award or subcontract. This means that you must certify that you are small for the NAICS code assigned to each 8(a) contract or subcontract as part of your initial offer to the procuring agency.
• For the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, the size status of your business concern is determined at the time of award for both Phase I and Phase II SBIR and STTR awards. This means that you must meet the eligibility requirements for the SBIR and STTR programs at the time you receive an SBIR or STTR Phase I or Phase II funding agreement from a federal agency.
• For the sale or lease of government property, the size status of your business concern is determined by the date set forth in the request of the other agency. This means that you must meet the applicable size standard for your primary industry at the time specified by the agency that is selling or leasing the government property.
• For compliance with programs of other agencies, the size status of your business concern is determined by the date set forth in the request of the other agency. This means that you must meet the applicable size standard for your primary industry at the time specified by the agency that is administering the program.

As you can see, the size status of your business concern can vary depending on the type of SBA assistance or program you are seeking. Therefore, it is important to check the size standards and eligibility requirements for each SBA purpose before you apply.

If you need assistance with applying for the various SBA programs or determining your size status, please contact Danielle Dietrich, Esq. at ddietrich@potomaclaw.com or 412-449-9141.

This blog is posted with the understanding that the author, publisher, and distributor of this blog and/or any linked publication are not rendering legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, assume no liability whatsoever in connection with its use. By viewing Potomac Law Group’s blog posts, the reader (‘you”) understands that there is no attorney-client relationship between you and Potomac Law Group. The blog should not be used as a substitute for obtaining legal advice from an attorney, and you are urged to consult your own legal counsel on any specific legal questions you may have.

Pursuant to applicable rules of professional conduct, portions of this blog may constitute Attorney Advertising.