Thousands of Big Businesses Become Small With New SBA Policies

PETALUMA, CA--(Marketwired - Jul 2, 2014) - According to the American Small Business League, every year for the last ten years the Small Business Administration (SBA) Office of Inspector General has reported the number one problem at the agency has been the diversion of federal small business contracts to large businesses.

In 2012 the SBA included 235 Fortune 500 firms in their small business statistics, then 175 in 2013.

Now the SBA has proposed two separate new policies that will allow thousands more big businesses to be considered small businesses.

Firms with up to 1,500 employees are currently allowed to receive federal small business contracts. According to the U.S. Census Bureau data, 98% of all U.S. firms have less than 100 employees and 89% have less than 20. The average American firm has approximately 12 employees.

Current SBA rules already allow firms that are over one hundred times larger than the average U.S. firm of 12 employees to be considered small businesses as well as firms fifteen times larger than 98% of all U.S. firms. Yet the SBA continues to increase small business size standards across the board.

The new SBA small business size standards have been widely criticized by the press. In a Washington Post article titled, "How 8,500 large companies will become small businesses overnight," J.D. Harrison states, "When the clock strikes midnight on Sunday, July 13, thousands of relatively large companies will -- poof -- suddenly become small businesses."

The American Small Business League (ASBL) will be opposing the majority of the increases in size standards proposed by the SBA. ASBL President Lloyd Chapman stated, "Every year for a decade the SBA Inspector General has named the diversion of federal small business contracts to large businesses as the number one problem at the SBA. They have refused to adopt any policies to end that rampant fraud, but they continually increase size standards to allow larger and larger firms to be considered small businesses." 

The American Small Business League (ASBL) has launched a national campaign to oppose the new rules they believe will divert billions of dollars in federal small business contracts to big businesses. The ASBL has begun contacting Chambers of Commerce across the country. To date the ASBL has contacted over one thousand chambers around the country and over 85% of the Chambers are joining the ASBL in opposing the new SBA polices they believe will harm legitimate small business and reduce the volume of federal contracts they receive.

The Interim Final Rule was announced on June 12 and will take effect July 14. Ironically the SBA will be taking public comment of the proposed policy until August 11, 2014.

Individuals can comment on the proposed SBA policies by going to:!submitComment;D=SBA-2014-0009-0001