Small Business Administration implements new revenue rule, starting January 2020

On Monday, Dec. 9, the U.S. Small Business Administration released its final rule to modify how it calculates annual revenues used to define size standards for small businesses.

Published in the Federal Register, the final rule goes into effect on Jan. 6, 2020. What does this mean for small business owners? Let’s take a closer look.

According to a statement released by the SBA, the change in regulations are “on the calculation of annual revenues from a three-year averaging period to a five-year averaging period, outside of the SBA Business Loan and Disaster Loan Programs.”

Going from three to five years means that some organizations may regain or retain their official small business designation.

In essence, a small business designation is defined based on industry code as ruled by the North American Industry Classification System. The coding system places businesses into industries and various subclassifications.

If the SBA does not consider your organization to be a small business, your eligibility for certain loans and government contract opportunities will differ.

To find out if your business has actual small business status with the new rule in place, the SBA has a table to visit online for further information.