Rule2022-12512
Small Business Size Standards: Wholesale Trade and Retail Trade
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 14, 2022
Effective
July 14, 2022
Issuing agencies
Small Business Administration
Abstract
The U.S. Small Business Administration (SBA) is increasing its receipts-based and employee-based small business size definitions (commonly referred to as "size standards") for North American Industry Classification System (NAICS) sectors related to Wholesale Trade and Retail Trade. Specifically, SBA is increasing size standards for 57 industries in those sectors, including 22 industries in NAICS Sector 42 (Wholesale Trade) and 35 industries in NAICS Sector 44-45 (Retail Trade).
Full Text
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<title>Federal Register, Volume 87 Issue 114 (Tuesday, June 14, 2022)</title>
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[Federal Register Volume 87, Number 114 (Tuesday, June 14, 2022)]
[Rules and Regulations]
[Pages 35869-35885]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-12512]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AH10
Small Business Size Standards: Wholesale Trade and Retail Trade
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
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SUMMARY: The U.S. Small Business Administration (SBA) is increasing its
receipts-based and employee-based small business size definitions
(commonly referred to as ``size standards'') for North American
Industry Classification System (NAICS) sectors related to Wholesale
Trade and Retail Trade. Specifically, SBA is increasing size standards
for 57 industries in those sectors, including 22 industries in NAICS
Sector 42 (Wholesale Trade) and 35 industries in NAICS Sector 44-45
(Retail Trade).
DATES: This rule is effective July 14, 2022.
FOR FURTHER INFORMATION CONTACT: Samuel Castilla, Economist, Office of
Size Standards, (202) 619-0389 or <a href="/cdn-cgi/l/email-protection#90e3f9eaf5e3e4f1fef4f1e2f4e3d0e3f2f1bef7ffe6"><span class="__cf_email__" data-cfemail="75061c0f100601141b1114071106350617145b121a03">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Discussion of Size Standards
To determine eligibility for Federal small business assistance, SBA
establishes small business size definitions (usually referred to as
``size standards'') for private sector industries in the United States.
SBA uses two primary measures of business size for size standards
purposes: average annual receipts and average number of employees. SBA
uses financial assets for certain financial industries and refining
capacity, in addition to employees, for the petroleum refining industry
to measure business size. In addition, SBA's Small Business Investment
Company (SBIC), Certified Development Company (CDC/504), and 7(a) Loan
Programs use either the industry-based size standards or tangible net
worth and net income-based alternative size standards to determine
eligibility for those programs.
In September 2010, Congress passed the Small Business Jobs Act of
2010 (Pub. L. 111-240, 124 Stat. 2504, September 27, 2010) (``Jobs
Act''), requiring SBA to review all size standards every five years and
make necessary adjustments to reflect current industry and market
conditions. In accordance with the Jobs Act, in early 2016, SBA
completed the first five-year review of all size standards--except
those for agricultural enterprises for which size standards were
previously set by Congress--and made appropriate adjustments to size
standards for a number of industries to reflect current industry and
Federal market conditions. SBA also adjusts its monetary-based size
standards for inflation at least once every five years. An interim
final rule on SBA's latest inflation adjustment to size standards,
effective August 19, 2019, was published in the Federal Register on
July 18, 2019 (84 FR 34261). SBA also updates its size standards every
five years to adopt the Office of Management and Budget's (OMB)
quinquennial North American Industry Classification System (NAICS)
revisions to its table of small business size standards. Effective
October 1, 2017, SBA adopted the OMB's 2017 NAICS revisions to its size
standards (82 FR 44886 (September 27, 2017)).\1\
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\1\ On December 21, 2021, the U.S. Office of Management and
Budget (OMB) published its ``Notice of NAICS 2022 Final Decisions .
. .'' (86 FR 72277), accepting the Economic Classification Policy
Committee (ECPC) recommendations, as outlined in the July 2, 2021,
Federal Register notice (86 FR 35350), for the 2022 revisions to the
North American Industry Classification System (NAICS), . . . .'' In
the near future, SBA will issue a proposed rule to adopt the OMB's
NAICS 2022 revisions for its table of size standards. SBA
anticipates updating its size standards with the NAICS 2022
revisions, effective October 1, 2022.
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This final rule is one of a series of final rules that will revise
size standards of industries grouped by various NAICS sectors. Rather
than revise all size standards at one time, SBA is revising size
standards by grouping industries
[[Page 35870]]
within various NAICS sectors that use the same size measure (i.e.,
employees or receipts). Although the industries in Sectors 42 and 44-45
have both receipt-based and employee-based industry size standards, SBA
is evaluating these sectors together because these size standards share
the characteristic that they cannot be used in Federal contracts for
supplies. Instead, by rule, these size standards are superseded by a
500-employee size standard for Federal contracts in the Wholesale and
Retail Trade sectors. In the prior review, SBA revised size standards
mostly on a sector-by-sector basis. As part of the second five-year
review of size standards, SBA reviewed all receipt-based and employee-
based size standards in NAICS Sectors 42 and 44-45 to determine whether
the existing size standards should be retained or revised based on the
current industry and program data. After its review, SBA published in
the May 25, 2021, issue of the Federal Register (86 FR 28012) a
proposed rule to increase the size standards for 14 industries in NAICS
Sector 42 (Wholesale Trade) and 35 industries in NAICS Sector 44-45
(Retail Trade). In this final rule, SBA is adopting the proposed size
standards from the May 2021 proposed rule without change, except for
eight industries in Sector 42 for which SBA is increasing size
standards instead of maintaining them as proposed after refining its
analysis of the economic characteristics of the comparison industry
group.
In conjunction with the ongoing second five-year review of size
standards under the Jobs Act, SBA developed a revised ``Size Standards
Methodology'' (Methodology) for developing, reviewing, and modifying
size standards, when necessary. SBA's revised Methodology provides a
detailed description of its analyses of various industry and program
factors and data sources, and how the agency uses the results to
establish and revise size standards. In the May 2021 proposed rule
itself, SBA detailed how it applied its revised Methodology to review
and modify where necessary, the existing size standards for industries
covered in this final rule. Prior to finalizing the revised
Methodology, SBA issued a notification in the April 27, 2018, edition
of the Federal Register (83 FR 18468) to solicit comments from the
public and notify stakeholders of the proposed changes to the
Methodology. SBA considered all public comments in finalizing the
revised Methodology. For a summary of comments and SBA's responses,
refer to SBA's April 11, 2019, Federal Register notification (84 FR
14587) of the issuance of the final revised Methodology. SBA's Size
Standards Methodology is available on its website at <a href="http://www.sba.gov/size">www.sba.gov/size</a>.
In evaluating an industry's size standard, SBA normally examines
its characteristics (such as average firm size, startup costs and entry
barriers, industry competition, and distribution of firms by size) and
the level and small business share of Federal contract dollars in that
industry. However, since NAICS codes in the Wholesale Trade and Retail
Trade sectors cannot be used to classify Federal Government procurement
for supplies, and only the applicable manufacturing code can be
applied, the Federal contracting factor is not considered in evaluating
industry-based size standards for these sectors (13 CFR 121.402(b)).
SBA also examines the potential impact a size standard revision might
have on its financial assistance programs, and whether a business
concern under a proposed or revised size standard would be dominant in
its industry.
SBA analyzed the characteristics of each industry in NAICS Sectors
42 and 44-45, mostly using a special tabulation obtained from the U.S.
Bureau of the Census from its 2012 Economic Census (the latest
available when the proposed rule was prepared). The 2012 special
tabulation contains information for different levels of NAICS
categories on average (simple and weighted average) and median firm
size in terms of both receipts and employment, total receipts generated
by the four and eight largest firms, the Herfindahl-Hirschman Index
(HHI), the Gini coefficient, and size distributions of firms by various
receipts and employment size groupings. To evaluate average asset size,
SBA combines the sales to total assets ratios by industry, obtained
from the Risk Management Association's (RMA) Annual eStatement Studies
(<a href="https://www.rmahq.org/statementstudies/">https://www.rmahq.org/statementstudies/</a>) with the simple average
receipts size by industry from the 2012 Economic Census tabulation to
estimate the average assets size for each industry.
Table 5 of the May 2021 proposed rule, Size Standards Supported by
Each Factor for Each Industry (Employees) and Table 6, Size Standards
Supported by Each Factor for Each Industry (Receipts), show the results
of analyses of industry factors for each industry covered by the
proposed rule. Of the 137 industries, including 71 in Sector 42 and 66
in Sector 44-45, reviewed in the proposed rule, the results from
analyses of the latest available data on the four primary industry
factors (i.e., average firm size, average assets size, four-firm ratio,
and Gini coefficient) supported increasing size standards for 49
industries (14 in Sector 42 and 35 in Sector 44-45), decreasing size
standards for 66 industries (38 in Sector 42 and 28 in Sector 44-45),
and maintaining size standards for 22 industries (19 in Sector 42 and 3
in Sector 44-45). Table 1, Summary of Calculated Size Standards,
summarizes the analytical results from the proposed rule by NAICS
sector.
Table 1--Summary of Calculated Size Standards
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Number of size Number of size Number of size Number of size
Sector Sector name standards standards standards standards
reviewed increased decreased maintained
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42.............................................. Wholesale Trade................... 71 14 38 19
44-45........................................... Retail Trade...................... 66 35 28 3
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Total....................................... .................................. 137 49 66 22
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In the May 2021 proposed rule, SBA discussed the impacts of the
COVID-19 pandemic on small businesses and greater society. Recognizing
the wide-ranging economic impacts of the pandemic, SBA decided not to
lower any size standards for which the analysis suggested lowering
them. Instead, SBA proposed to maintain all size standards for
industries in which the analytical results supported a decrease or no
change to size standards and adopt all size standards for which the
analytical results supported an increase to size standards. In this
final rule, SBA is adopting the proposed size standards from the May
2021 proposed rule without change, except for eight
[[Page 35871]]
industries in Sector 42 for which SBA is increasing size standards
instead of maintaining them as proposed after refining its analysis of
the economic characteristics of the comparison industry group in
accordance with its ``Size Standards Methodology.'' Specifically, SBA
is increasing the size standards for the following eight additional
NAICS industries from 100 employees to 125 employees: NAICS 423740
(Refrigeration Equipment and Supplies Merchant Wholesalers); NAICS
423820 (Farm and Garden Machinery and Equipment Merchant Wholesalers);
NAICS 423840 (Industrial Supplies Merchant Wholesalers); NAICS 423850
(Service Establishment Equipment and Supplies Merchant Wholesalers);
NAICS 423930 (Recyclable Material Merchant Wholesalers); NAICS 423940
(Jewelry, Watch, Precious Stone, and Precious Metal Merchant
Wholesalers); NAICS 424520 (Livestock Merchant Wholesalers); and NAICS
425110 (Business to Business Electronic Markets).
To evaluate the impact of the changes to size standards adopted in
this final rule on SBA's loan programs, SBA analyzed its internal data
on its guaranteed and disaster loan programs for fiscal years 2018-
2020. The results of this analysis can be found in the Regulatory
Impact Analysis section of this final rule. The impact of these changes
is limited to SBA's loan programs because, as discussed above, these
size standards do not apply to Federal procurements, such as those in
SBA's contracting programs.
In the May 2021 proposed rule, SBA sought comments on its proposal
to increase size standards for 49 industries and retain the current
size standards for the remaining 88 industries in Sectors 42 and 44-45.
Specifically, SBA requested comments on whether the proposed revisions
are appropriate for the industries covered by the proposed rule;
whether the decision not to lower any size standards is justified by
the COVID-19 pandemic; whether the equal weighting of individual
factors to derive an industry size standard is appropriate; and whether
the data sources used were appropriate or sufficient.
Discussion of Comments
SBA received a total of nine comments to the proposed rule, of
which four were not pertinent. Of the remaining five comments that were
pertinent to the rule, two comments expressed support for the proposed
changes to size standards in general, one comment supported SBA's
proposed change for the size standard for convenience store-related
industries, one comment raised concern regarding SBA's proposal to
retain the 500-employee size standard applicable to nonmanufacturers
for purposes of Federal contracting, and one comment opposed the
proposed changes. All comments to the proposed rule are available at
<a href="http://www.regulations.gov">www.regulations.gov</a> (RIN 3245-AH10) and are summarized and discussed
below.
Comments Supporting SBA's Proposed Changes to Both Sectors
SBA received two comments supporting SBA's proposed changes to size
standards in both Wholesale Trade and Retail Trade sectors. One
commenter supported the rule because they viewed size limits as an
important tool for defining small businesses. The second commenter
supported the rule on the grounds that it would result in more
assistance to small businesses in the form of increased SBA loans and
Federal contracting opportunities.
SBA's Response
SBA agrees with the comment that size limits are an important tool
for defining small businesses for eligibility for Federal small
business assistance. SBA's proposed changes will help more businesses
qualify as small and ensure that SBA's resources and assistance are
directed to their intended beneficiaries. SBA also agrees with the
comment expressing support for the rule on the grounds that it would
result in more assistance to small businesses in the form of increased
financial assistance and Federal contracting opportunities. As shown in
Table 6 in the Regulatory Impact Analysis section of the rule, below,
SBA estimates that the changes to size standards in this final rule
will result in an increase to the number of 7(a) and CDC/504 and
Economic Injury Disaster Loan (EIDL) loans to small firms. Moreover,
although industries within Sectors 42 and 44-45 cannot be used for
purposes of classifying Federal contracting opportunities, SBA believes
that all small businesses will benefit from this rule in terms of
access to its financial assistance that is available for small
businesses. Therefore, SBA is adopting increases to 49 size standards
from the proposed rule plus increases to eight additional size
standards based on its reevaluation of analytical results, as discussed
above.
Comment Supporting Proposed Changes to the Convenience Services
Industry
SBA received one comment from an association representing the U.S.
convenience services industry, including owners and operators of
vending machines and micro markets, expressing support for SBA's
changes to size standards for the industries it represents. The
commenter did not specify which 6-digit NAICS industries were the focus
of their comment, but based on industry descriptions in the NAICS
manual, SBA assumed the comment pertained to NAICS 445120 (Convenience
Stores), NAICS 447110 (Gasoline Stations with Convenience Stores),
NAICS 454210 (Vending Machine Operators), and NAICS 454390 (Other
Direct Selling Establishments). The association supported SBA's
proposed changes to size standards in these industries on the grounds
that the changes would expand eligibility for SBA's assistance to
operators that were previously ineligible to participate in SBA's
programs and to those who may have experienced economic hardships
related to the COVID-19 pandemic.
SBA's Response
In the May 2021 proposed rule, SBA proposed to increase the size
standards for NAICS 454210 and 454390 from $12 million and $8 million
to $18.5 million and $13 million, respectively. For NAICS 445120 and
447110, in response to the unprecedented economic impacts of the
ongoing COVID-19 pandemic on small businesses and Federal Government
response, in the May 2021 proposed rule, SBA proposed to retain their
size standards at $32 million instead of decreasing them to $8.5
million and $21 million, respectively, based on analytical results. SBA
agrees with the association that these changes will help more small
businesses in these industries qualify for SBA's financial assistance.
SBA believes that expanding the reach of its programs to include a
greater number of small firms supports all small businesses and the
overall economy as the Nation continues to recover from the economic
challenges caused by the COVID-19 pandemic and small businesses remain
in need of SBA's assistance as they recover from the pandemic. SBA
believes that the proposed size standards for these industries are more
reflective of the current economic characteristics of businesses in
these industries and the latest trends in the economy. Thus, SBA is
adopting its proposal to increase the size standards for NAICS 454210
and 454390 from $12 million and $8 million to $18.5 million and $13
million, respectively, and retain the size standards for NAICS 445120
and 447110 at $32.0 million.
[[Page 35872]]
Comment on the 500-Employee Size Standard Applicable to
Nonmanufacturers for Purposes of Federal Contracting
In response to its proposal to retain the nonmanufacturer size
standard at 500 employees, SBA received one comment to the May 2021
proposed rule from the members of the U.S. House of Representatives
Subcommittee on Contracting and Infrastructure requesting that SBA
evaluate the current 500-employee size standard under its
nonmanufacturer rule. Specifically, the comment expressed concern that
because the level of revenue is immaterial to the determination of size
under the 500-employee nonmanufacturer size standard, the current rule
may allow a firm with billions of dollars in revenues to qualify as a
small business. They suggested that SBA conduct an assessment of the
nonmanufacturing industry based on revenue and/or other factors that
may be more appropriate to determine what may be considered small for
the size of a business qualifying as a nonmanufacturer. The comment
also raised other issues outside the scope of the SBA's proposed rule,
such as reporting on SBA's small business procurement scorecard and
SBA's process for granting waivers to the nonmanufacturing rule. SBA
responded to the comments on those issues in a separate letter and
addresses the comment regarding the 500-employee nonmanufacturer size
standard below.
SBA's Response
While the nonmanufacturer rule applies to firms primarily engaged
in business activities within Sectors 42 and 44-45, SBA did not review
the 500-employee nonmanufacturer size standard in its May 2021 proposed
rule. However, in an upcoming proposed rule covering the manufacturing
sector and industries with employee-based size standards in other
sectors (except Wholesale Trade or Retail Trade), SBA will examine
whether the current 500-employee size standard for nonmanufacturers is
appropriate and provide a detailed response to the Subcommittee's
comment. That rulemaking will be identified under RIN 3245-AH09.
Interested parties will have an opportunity to review the SBA's
proposed rule and submit comments when the rule is published in the
Federal Register. Thus, in this final rule, SBA is not evaluating the
size standard for nonmanufacturers.
Comment Opposed to SBA's Proposed Changes
SBA received one comment opposed to its proposed changes on the
grounds that SBA's size standards are generally too large and allow
larger corporations to obtain small business status and to dominate the
market. The commenter also recommended that SBA abolish the Davis-Bacon
Act and other regulations that may place burdens on small businesses.
The commenter also urged SBA to broadly define small businesses as
those with less than 100 employees.
SBA's Response
SBA believes that establishing a common industry size standard of
less than 100 employees for all wholesale and retail trade firms would
be contrary to the Small Business Act. Under the Small Business Act
(Act) (15 U.S.C. 632(a)), SBA's Administrator is responsible for
establishing small business size definitions and ensuring that such
definitions vary from industry to industry to reflect differences among
various industries. The Jobs Act requires SBA to review every five
years all size standards and make necessary adjustments to reflect
current industry and Federal market conditions. The size standards
adopted in this final rule are part of SBA's efforts to meet its
statutory responsibility. Moreover, SBA conducted its review of size
standards according to its Size Standards Methodology which was adopted
through a notice and comment process. SBA considered all public
comments in finalizing the revised Methodology, which included a
detailed explanation of how these sectors would be analyzed.
SBA also does not agree with the comment urging SBA to abolish the
Davis-Bacon Act and other regulations that may place burdens on small
businesses. The Davis-Bacon Act requires contractors and subcontractors
to pay laborers and mechanics employed under the contract no less than
the locally prevailing wages and fringe benefits for corresponding work
on similar projects in the area (Pub. L. 107-217, Sec. 1, 6(b), Aug.
21, 2002, 116 Stat. 1062, 1304). While the commenter did not specify
which regulations would be included under the ``other'' category, SBA
notes that it generally does not have the authority to repeal or
override the regulations of other agencies or of Acts passed by
Congress.
For the reasons above, in this final rule, SBA is adopting the
proposed size standards from the May 2021 proposed rule without change,
except for eight industries in Sector 42 for which SBA is increasing
size standards instead of maintaining them in the proposed rule.
Summary of Adopted Revisions to Size Standards
Based on the evaluation of public comments it received on the May
2021 proposed rule and on its analyses of industry factors using the
latest available relevant industry and program data when the proposed
rule was prepared, SBA is increasing 57 size standards, including 22
employee-based size standards in NAICS Sector 42 and 35 receipts-based
size standards in NAICS Sector 44-45. A summary of SBA's size standards
revisions in this rule can be found below in Table 2, Summary of Size
Standards Revisions (Employees) and Table 3, Summary of Size Standards
Revisions (Receipts).
Table 2--Summary of Size Standards Revisions
[Employees]
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Current size Calculated Adopted size
NAICS code NAICS U.S. industry title standard size standard standard
(employees) (employees) (employees)
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423110........... Automobile and Other Motor Vehicle Merchant 250 225 250
Wholesalers.
423120........... Motor Vehicle Supplies and New Parts Merchant 200 150 200
Wholesalers.
423130........... Tire and Tube Merchant Wholesalers........... 200 175 200
423140........... Motor Vehicle Parts (Used) Merchant 100 125 125
Wholesalers.
423210........... Furniture Merchant Wholesalers............... 100 50 100
423220........... Home Furnishing Merchant Wholesalers......... 100 75 100
423310........... Lumber, Plywood, Millwork, and Wood Panel 150 75 150
Merchant Wholesalers.
423320........... Brick, Stone, and Related Construction 150 100 150
Material Merchant Wholesalers.
423330........... Roofing, Siding, and Insulation Material 200 225 225
Merchant Wholesalers.
423390........... Other Construction Material Merchant 100 75 100
Wholesalers.
423410........... Photographic Equipment and Supplies Merchant 200 150 200
Wholesalers.
[[Page 35873]]
423420........... Office Equipment Merchant Wholesalers........ 200 200 200
423430........... Computer and Computer Peripheral Equipment 250 225 250
and Software Merchant Wholesalers.
423440........... Other Commercial Equipment Merchant 100 50 100
Wholesalers.
423450........... Medical, Dental, and Hospital Equipment and 200 200 200
Supplies Merchant Wholesalers.
423460........... Ophthalmic Goods Merchant Wholesalers........ 150 175 175
423490........... Other Professional Equipment and Supplies 150 125 150
Merchant Wholesalers.
423510........... Metal Service Centers and Other Metal 200 150 200
Merchant Wholesalers.
423520........... Coal and Other Mineral and Ore Merchant 100 200 200
Wholesalers.
423610........... Electrical Apparatus and Equipment, Wiring 200 125 200
Supplies, and Related Equipment Merchant
Wholesalers.
423620........... Household Appliances, Electric Housewares, 200 225 225
and Consumer Electronics Merchant
Wholesalers.
423690........... Other Electronic Parts and Equipment Merchant 250 225 250
Wholesalers.
423710........... Hardware Merchant Wholesalers................ 150 75 150
423720........... Plumbing and Heating Equipment and Supplies 200 150 200
(Hydronics) Merchant Wholesalers.
423730........... Warm Air Heating and Air-Conditioning 150 175 175
Equipment and Supplies Merchant Wholesalers.
423740........... Refrigeration Equipment and Supplies Merchant 100 100 125
Wholesalers.
423810........... Construction and Mining (except Oil Well) 250 200 250
Machinery and Equipment Merchant Wholesalers.
423820........... Farm and Garden Machinery and Equipment 100 100 125
Merchant Wholesalers.
423830........... Industrial Machinery and Equipment Merchant 100 75 100
Wholesalers.
423840........... Industrial Supplies Merchant Wholesalers..... 100 100 125
423850........... Service Establishment Equipment and Supplies 100 100 125
Merchant Wholesalers.
423860........... Transportation Equipment and Supplies (except 150 175 175
Motor Vehicle) Merchant Wholesalers.
423910........... Sporting and Recreational Goods and Supplies 100 50 100
Merchant Wholesalers.
423920........... Toy and Hobby Goods and Supplies Merchant 150 175 175
Wholesalers.
423930........... Recyclable Material Merchant Wholesalers..... 100 100 125
423940........... Jewelry, Watch, Precious Stone, and Precious 100 100 125
Metal Merchant Wholesalers.
423990........... Other Miscellaneous Durable Goods Merchant 100 50 100
Wholesalers.
424110........... Printing and Writing Paper Merchant 200 225 225
Wholesalers.
424120........... Stationery and Office Supplies Merchant 150 150 150
Wholesalers.
424130........... Industrial and Personal Service Paper 150 125 150
Merchant Wholesalers.
424210........... Drugs and Druggists' Sundries Merchant 250 250 250
Wholesalers.
424310........... Piece Goods, Notions, and Other Dry Goods 100 50 100
Merchant Wholesalers.
424320........... Men's and Boys' Clothing and Furnishings 150 125 150
Merchant Wholesalers.
424330........... Women's, Children's, and Infants' Clothing 100 75 100
and Accessories Merchant Wholesalers.
424340........... Footwear Merchant Wholesalers................ 200 200 200
424410........... General Line Grocery Merchant Wholesalers.... 250 250 250
424420........... Packaged Frozen Food Merchant Wholesalers.... 200 150 200
424430........... Dairy Product (except Dried or Canned) 200 200 200
Merchant Wholesalers.
424440........... Poultry and Poultry Product Merchant 150 125 150
Wholesalers.
424450........... Confectionery Merchant Wholesalers........... 200 225 225
424460........... Fish and Seafood Merchant Wholesalers........ 100 50 100
424470........... Meat and Meat Product Merchant Wholesalers... 150 100 150
424480........... Fresh Fruit and Vegetable Merchant 100 75 100
Wholesalers.
424490........... Other Grocery and Related Products Merchant 250 200 250
Wholesalers.
424510........... Grain and Field Bean Merchant Wholesalers.... 200 175 200
424520........... Livestock Merchant Wholesalers............... 100 100 125
424590........... Other Farm Product Raw Material Merchant 100 175 175
Wholesalers.
424610........... Plastics Materials and Basic Forms and Shapes 150 125 150
Merchant Wholesalers.
424690........... Other Chemical and Allied Products Merchant 150 175 175
Wholesalers.
424710........... Petroleum Bulk Stations and Terminals........ 200 225 225
424720........... Petroleum and Petroleum Products Merchant 200 200 200
Wholesalers (except Bulk Stations and
Terminals).
424810........... Beer and Ale Merchant Wholesalers............ 200 125 200
424820........... Wine and Distilled Alcoholic Beverage 250 225 250
Merchant Wholesalers.
424910........... Farm Supplies Merchant Wholesalers........... 200 175 200
424920........... Book, Periodical, and Newspaper Merchant 200 200 200
Wholesalers.
424930........... Flower, Nursery Stock, and Florists' Supplies 100 50 100
Merchant Wholesalers.
424940........... Tobacco and Tobacco Product Merchant 250 250 250
Wholesalers.
424950........... Paint, Varnish, and Supplies Merchant 150 150 150
Wholesalers.
424990........... Other Miscellaneous Nondurable Goods Merchant 100 50 100
Wholesalers.
425110........... Business to Business Electronic Markets...... 100 100 125
425120........... Wholesale Trade Agents and Brokers........... 100 125 125
[[Page 35874]]
441110........... New Car Dealers.............................. 200 150 200
454310........... Fuel Dealers................................. 100 75 100
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Table 3--Summary of Size Standards Revisions
[Receipts]
----------------------------------------------------------------------------------------------------------------
Current size Calculated Adopted size
NAICS code NAICS U.S. industry title standard ($ size standard standard ($
million) ($ million) million)
----------------------------------------------------------------------------------------------------------------
441120........... Used Car Dealers............................. $27.0 $17.0 $27.0
441210........... Recreational Vehicle Dealers................. 35.0 19.0 35.0
441222........... Boat Dealers................................. 35.0 11.5 35.0
441228........... Motorcycle, ATV, and All Other Motor Vehicle 35.0 10.0 35.0
Dealers.
441310........... Automotive Parts and Accessories Stores...... 16.5 25.0 25.0
441320........... Tire Dealers................................. 16.5 22.5 22.5
442110........... Furniture Stores............................. 22.0 19.0 22.0
442210........... Floor Covering Stores........................ 8.0 7.5 8.0
442291........... Window Treatment Stores...................... 8.0 10.0 10.0
442299........... All Other Home Furnishings Stores............ 22.0 29.5 29.5
443141........... Household Appliance Stores................... 12.0 19.5 19.5
443142........... Electronics Stores........................... 35.0 31.5 35.0
444110........... Home Centers................................. 41.5 41.5 41.5
444120........... Paint and Wallpaper Stores................... 30.0 21.0 30.0
444130........... Hardware Stores.............................. 8.0 14.5 14.5
444190........... Other Building Material Dealers.............. 22.0 14.0 22.0
444210........... Outdoor Power Equipment Stores............... 8.0 8.5 8.5
444220........... Nursery, Garden Center, and Farm Supply 12.0 19.0 19.0
Stores.
445110........... Supermarkets and Other Grocery (except 35.0 32.0 35.0
Convenience) Stores.
445120........... Convenience Stores........................... 32.0 8.5 32.0
445210........... Meat Markets................................. 8.0 7.0 8.0
445220........... Fish and Seafood Markets..................... 8.0 7.0 8.0
445230........... Fruit and Vegetable Markets.................. 8.0 7.5 8.0
445291........... Baked Goods Stores........................... 8.0 14.0 14.0
445292........... Confectionery and Nut Stores................. 8.0 17.0 17.0
445299........... All Other Specialty Food Stores.............. 8.0 9.0 9.0
445310........... Beer, Wine, and Liquor Stores................ 8.0 9.0 9.0
446110........... Pharmacies and Drug Stores................... 30.0 33.0 33.0
446120........... Cosmetics, Beauty Supplies, and Perfume 30.0 28.0 30.0
Stores.
446130........... Optical Goods Stores......................... 22.0 26.0 26.0
446191........... Food (Health) Supplement Stores.............. 16.5 20.0 20.0
446199........... All Other Health and Personal Care Stores.... 8.0 8.5 8.5
447110........... Gasoline Stations with Convenience Stores.... 32.0 21.0 32.0
447190........... Other Gasoline Stations...................... 16.5 29.5 29.5
448110........... Men's Clothing Stores........................ 12.0 22.5 22.5
448120........... Women's Clothing Stores...................... 30.0 25.0 30.0
448130........... Children's and Infants' Clothing Stores...... 35.0 32.5 35.0
448140........... Family Clothing Stores....................... 41.5 39.5 41.5
448150........... Clothing Accessories Stores.................. 16.5 29.5 29.5
448190........... Other Clothing Stores........................ 22.0 27.5 27.5
448210........... Shoe Stores.................................. 30.0 29.0 30.0
448310........... Jewelry Stores............................... 16.5 18.0 18.0
448320........... Luggage and Leather Goods Stores............. 30.0 33.5 33.5
451110........... Sporting Goods Stores........................ 16.5 23.5 23.5
451120........... Hobby, Toy, and Game Stores.................. 30.0 31.0 31.0
451130........... Sewing, Needlework, and Piece Goods Stores... 30.0 19.5 30.0
451140........... Musical Instrument and Supplies Stores....... 12.0 20.0 20.0
451211........... Book Stores.................................. 30.0 31.5 31.5
451212........... News Dealers and Newsstands.................. 8.0 20.0 20.0
452210........... Department Stores............................ 35.0 32.5 35.0
452311........... Warehouse Clubs and Supercenters............. 32.0 41.5 41.5
452319........... All Other General Merchandise Stores......... 35.0 35.0 35.0
453110........... Florists..................................... 8.0 6.5 8.0
453210........... Office Supplies and Stationery Stores........ 35.0 32.0 35.0
453220........... Gift, Novelty, and Souvenir Stores........... 8.0 12.0 12.0
453310........... Used Merchandise Stores...................... 8.0 12.5 12.5
453910........... Pet and Pet Supplies Stores.................. 22.0 28.0 28.0
453920........... Art Dealers.................................. 8.0 14.5 14.5
[[Page 35875]]
453930........... Manufactured (Mobile) Home Dealers........... 16.5 16.5 16.5
453991........... Tobacco Stores............................... 8.0 7.5 8.0
453998........... All Other Miscellaneous Store Retailers 8.0 10.0 10.0
(except Tobacco Stores).
454110........... Electronic Shopping and Mail-Order Houses.... 41.5 33.0 41.5
454210........... Vending Machine Operators.................... 12.0 18.5 18.5
454390........... Other Direct Selling Establishments.......... 8.0 13.0 13.0
----------------------------------------------------------------------------------------------------------------
Table 4, Summary of Adopted Size Standards Revisions by Sector,
summarizes the adopted changes to size standards by NAICS sector.
Table 4--Summary of Adopted Size Standards Revisions by Sector
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of size Number of size Number of Size Number of size
Sector Sector name standards standards standards standards
reviewed increased decreased maintained
--------------------------------------------------------------------------------------------------------------------------------------------------------
42.............................................. Wholesale Trade................... 71 22 0 49
44-45........................................... Retail Trade...................... 66 35 0 31
-------------------------------------------------------------------
Total....................................... .................................. 137 57 0 80
--------------------------------------------------------------------------------------------------------------------------------------------------------
Evaluation of Dominance in Field of Operation
SBA determined that for the industries evaluated under this final
rule, no individual firm at or below the adopted size standards would
be large enough to dominate its field of operation. At the size
standard levels adopted in this final rule, the small business share of
total industry receipts among those industries would be, on average,
0.4%, varying from 0.005% to 4.8%. These market shares effectively
preclude a firm at or below the adopted size standards from exerting
control on any of the industries.
Alternatives Considered
In response to the unprecedented economic impacts of the ongoing
COVID-19 pandemic on small businesses and Federal Government response,
SBA is adopting increases to size standards where the data suggests
increases are warranted, and retaining all current size standards where
the data suggested lowering of size standards is appropriate. SBA is
also retaining all current size standards where the data suggested no
changes to the current size standards.
Nonetheless, SBA considered two other alternatives. Alternative
Option One was to adopt changes to size standards exactly as suggested
by the analytical results. In other words, Alternative Option One would
entail increasing size standards for 57 industries, decreasing them for
66 industries, and retaining them at their current levels for 14
industries. Alternative Option Two was to retain all current size
standards, including those for which the analytical results support
increases.
SBA did not adopt Alternative Option One because it would cause a
substantial number of currently small businesses to lose their small
business status and hence to lose their access to Federal small
business assistance, especially SBA's financial assistance. Lowering
size standards in the current environment would also run counter to
various measures the Federal Government has implemented to help small
businesses and the overall economy recover from the ongoing COVID-19
pandemic. Considering the impacts of the Great Recession and Federal
Government actions that followed to support small businesses and the
overall economy, SBA also adopted a policy of not decreasing size
standards during the first five-year review of size standards, even
though the data supported decreases.
Under Alternative Option Two, given the current COVID-19 pandemic,
SBA considered retaining the current level of all size standards even
though the analytical results suggested changing them. Under this
option, as the current situation develops, SBA will be able to assess
new data available on economic indicators and SBA loans before adopting
changes to size standards. However, SBA is not adopting Alternative
Option Two because the results discussed in the Regulatory Impact
Analysis section, below, show that retaining all size standards at
their current levels would cause otherwise qualified small businesses
to forgo various small business benefits becoming available to them
under the option of increasing 57 and retaining 80 size standards. Such
benefits would include access to capital through SBA's business loan,
EIDL loan, and SBIC programs, and exemptions from paperwork and other
compliance requirements.
Compliance With Executive Order 12866, the Congressional Review Act (5
U.S.C. 801-808), the Regulatory Flexibility Act (5 U.S.C. 601-612),
Executive Orders 13563, 12988, and 13132, and the Paperwork Reduction
Act (44 U.S.C. Ch. 35)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
final rule is a significant regulatory action for purposes of Executive
Order 12866. Accordingly, in the next section SBA provides a Regulatory
Impact Analysis of this final rule, including: (1) A statement of the
need for the regulatory action, (2) An examination of alternative
approaches, and (3) An evaluation of the benefits and costs--both
quantitative and qualitative--of the regulatory action and the
alternatives considered.
[[Page 35876]]
Regulatory Impact Analysis
1. What is the need for this regulatory action?
SBA's mission is to aid and assist small businesses through a
variety of financial, procurement, business development and counseling,
and disaster assistance programs. To determine the actual intended
beneficiaries of these programs, SBA establishes numerical size
standards by industry to identify businesses that are deemed small.
Under the Small Business Act (Act) (15 U.S.C. 632(a)), SBA's
Administrator is responsible for establishing small business size
definitions (or ``size standards'') and ensuring that such definitions
vary from industry to industry to reflect differences among various
industries. The Jobs Act requires SBA to review every five years all
size standards and make necessary adjustments to reflect current
industry and Federal market conditions. This final rule is part of the
second five-year review of size standards in accordance with the Jobs
Act. The first five-year review of size standards was completed in
early 2016. Such periodic reviews of size standards provide SBA with an
opportunity to incorporate ongoing changes to industry structure and
Federal market environment into size standards and to evaluate the
impacts of prior revisions to size standards on small businesses. This
also provides SBA with an opportunity to seek and incorporate public
input to the size standards review and analysis. SBA believes that the
size standards revisions adopted for industries being reviewed in this
final rule will make size standards more reflective of the current
economic characteristics of businesses in those industries and the
latest trends in the Federal marketplace.
The revisions to the existing size standards for 57 industries in
NAICS Sectors 42 and 44-45 are consistent with SBA's statutory mandate
to help small businesses grow and create jobs and to review and adjust
size standards every five years. This regulatory action promotes the
Administration's goals and objectives and ensures that SBA complies
with statutory requirements. One of SBA's goals in support of promoting
the Administration's objectives is to help small businesses succeed
through fair and equitable access to capital and credit, Federal
Government contracts and purchases, and management and technical
assistance. Reviewing and modifying size standards, when appropriate,
ensures that intended beneficiaries can access Federal small business
programs that are designed to assist them to become competitive and
create jobs.
2. What are the potential benefits and costs of this regulatory action?
OMB directs agencies to establish an appropriate baseline to
evaluate any benefits, costs, or transfer impacts of regulatory actions
and alternative approaches considered. The baseline should represent
the agency's best assessment of what the world would look like absent
the regulatory action. For a new regulatory action promulgating
modifications to an existing regulation (such as modifying the existing
size standards), a baseline assuming no change to the regulation (i.e.,
making no changes to current size standards) generally provides an
appropriate benchmark for evaluating benefits, costs, or transfer
impacts of regulatory changes and their alternatives.
Changes to Size Standards
Based on the results from the analyses of the latest industry data,
evaluation of the public comments on the proposed rule, as well as
consideration of the impact of size standards changes on small
businesses and significant adverse impacts of the COVID-19 pandemic on
small firms and the overall economy, of the total of 137 industries in
Sectors 42 and 44-45 evaluated in the proposed rule, SBA is adopting
increases to size standards for 57 industries and maintaining current
size standards for the remaining 80 industries.
The Baseline
For purposes of this regulatory action, the baseline represents
maintaining the ``status quo,'' i.e., making no changes to the current
size standards. Using the number of small businesses and levels of
small business benefits (such as SBA's business loans, disaster
assistance, etc.) they receive under the current size standards as a
baseline, one can examine the potential benefits, costs, and transfer
impacts of changes to size standards on small businesses and on the
overall economy.
Based on the 2012 Economic Census (the latest available when this
proposed rule was prepared), of a total of about 975,569 businesses in
industries in Sectors 42 and 44-45, 97.4% are considered small under
the current size standards. That percentage varies from 96.6% in Sector
42 to 97.9% in Sector 44-45.
Based on SBA's internal data on its loan programs for fiscal years
2018-2020, small businesses in those industries received, on an annual
basis, a total of 9,871 7(a) and CDC/504 loans in that period, totaling
about $5.4 billion, of which 82.6% was issued through the 7(a) program
and 17.4% was issued through the CDC/504 program. During fiscal years
2018-2020, small businesses in those industries also received 561 loans
through SBA's Economic Injury Disaster Loan (EIDL) program, totaling
about $28.3 million on an annual basis.\2\ Table 5, Baseline for All
Industries, provides these baseline results by sector.
---------------------------------------------------------------------------
\2\ The analysis of the disaster loan data excludes physical
disaster loans that are available to anyone regardless of size,
disaster loans issued to nonprofit entities, and EIDLs issued under
the COVID-19 relief program. Effective January 1, 2022, SBA stopped
accepting applications for new COVID EIDL loans or advances. Thus,
the disaster loan analysis presented here pertains to the regular
EIDL loans only.
SBA estimates impacts of size standards changes on EIDL loans by
calculating the ratio of businesses getting EIDL loans to total
small businesses (based on the Economic Census data) and multiplying
it by the number of impacted small firms. Due to data limitations,
for FY 2019-20, some loans with both physical and EIDL loan
components could not be broken into the physical and EIDL loan
amounts. In such cases, SBA applied the ratio of EIDL amount to
total (physical loan + EIDL) amount using FY 2016-18 data to the FY
2019-20 data to obtain the amount attributable to the EIDL loans.
---------------------------------------------------------------------------
The results of regulatory impact analyses SBA provided in the May
2021 proposed rule were based on SBA loan data for fiscal years (FYs)
2016-2018. In this final rule, SBA is updating the impact analysis
results by using SBA loan data for fiscal years 2018-2020. Accordingly,
there can be some differences between the proposed rule and this final
rule with respect to impacts of size standards changes on SBA loans.
Table 5--Baseline for All Industries
----------------------------------------------------------------------------------------------------------------
Sector 42 Sector 44-45 Total
----------------------------------------------------------------------------------------------------------------
Baseline all industries (current size standards)................ 71 66 137
Total firms (2012 Economic Census).............................. 319,716 655,853 975,569
Total small firms under current size standards (2012 Economic 308,710 641,995 950,705
Census)........................................................
[[Page 35877]]
Small firms as % of total firms................................. 96.6% 97.9% 97.5%
No. of 7(a) and CDC/504 loans (FY 2018-2020).................... 2,665 7,206 9,871
Amount of 7(a) and CDC/504 loans ($ million) (FY 2018-2020)..... $1,706 $3,732 $5,438
No. of EIDL loans (FY 2018-2020) *.............................. 123 438 561
Amount of EIDL loans ($million) (FY 2018-2020) *................ $7.4 $20.9 $28.3
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
accepting applications for new COVID EIDL loans or advances.
Increases to Size Standards
As stated above, of the 73-employee-based and 64 receipts-based
size standards reviewed in NAICS Sectors 42 and 44-45, based on the
results from analyses of latest industry data, impacts of size
standards changes on small businesses, considerations of the impacts of
the COVID-19 pandemic, and public comments to the proposed rule, SBA is
adopting increases to size standards for 57 industries and maintaining
size standards for the remaining 80 industries. Below are descriptions
of the benefits, costs, and transfer impacts of the increases to size
standards adopted in this final rule.
Benefits of Increasing Size Standards
The most significant benefit to businesses from increases to size
standards is gaining eligibility for Federal small business assistance
programs or retaining that eligibility for such programs for a longer
period. These include SBA's business loan programs, such as the 7(a)
and CDC/504 programs, and the EIDL loan program. SBA's regulations
provide that NAICS codes for the Wholesale and Retail Trade industries
shall not be used to classify Federal Government acquisition for
supplies (13 CFR 121.402(b)). As such, for purposes of Federal
contracts set aside for small businesses, the size standard for all
industries in the Wholesale Trade and Retail Trade sectors is 500
employees under the SBA's nonmanufacturer rule (see 13 CFR 121.406(b)).
SBA is not evaluating the 500-employee the nonmanufacturer size
standard in this final rule. Thus, the increases to size standards in
this final rule will not impact the Federal market for contracts set
aside for small businesses.
Besides the access to SBA's financial assistance programs discussed
above, because of increases to size standards, small businesses also
benefit through reduced fees, less paperwork, and fewer compliance
requirements that are available to small businesses through the Federal
Government programs. However, SBA has no data to estimate the number of
small businesses receiving such benefits.
Based on the 2012 Economic Census (the latest available when the
proposed rule was prepared), SBA estimates that in 57 industries in
NAICS Sectors 42 and 44-45 for which this final rule is increasing size
standards, about 2,000 firms not small under the current size standards
will become small under the adopted size standards increases and
therefore become eligible for SBA's financial and other Federal non-
procurement programs. That represents about 0.5% of all firms
classified as small under the current size standards in industries for
which SBA is adopting increases to size standards. Table 6, Impacts of
Increasing Size Standards, provides impacts of increasing 57 and
maintaining 80 size standards by NAICS sector.
Table 6--Impacts of Increasing Size Standards
----------------------------------------------------------------------------------------------------------------
Sector 42 Sector 44-45 Total
----------------------------------------------------------------------------------------------------------------
No. of industries with increases to size standards.............. 22 35 57
Total current small businesses in industries with increases to 93,426 286,758 380,184
size standards (2012 Economic Census)..........................
Additional firms qualifying as small under standards (2012 308 1,694 2,002
Economic Census)...............................................
% of additional firms qualifying as small relative to current 0.3% 0.6% 0.5%
small businesses in industries with increases to size standards
Total no. of 7(a) and 504 loans to small business in industries 536 3,692 4,228
with increases to size standards (FY 2018-2020)................
Total 7(a) and 504 loan amounts to small businesses in $341 $1,641 $1,982
industries with increases to size standards ($ million) (FY
2018-2020).....................................................
Estimated no. of 7(a) and 504 loans to newly-qualified small 2 23 25
firms..........................................................
Estimated 7(a) and 504 loan amounts to newly-qualified small $1.3 $10.3 $11.6
firms ($ million)..............................................
% increase to 7(a) and 504 loan amount relative to the total 0.4% 0.6% 0.6%
amount of 7(a) and 504 loans in industries with increases to
size standards.................................................
Total no. of EIDL loans to small businesses in industries with 26 248 274
increases to size standards (FY 2018-2020) *...................
Total amount of EIDL loans to small businesses in industries $1.5 $11.7 $13.3
with increases to size standards ($ million) (FY 2018-2020) *..
Estimated no. of EIDL loans to newly-qualified small firms *.... 1 2 3
Estimated EIDL loan amount to newly-qualified small firms ($ $0.06 $0.09 $0.2
million) *.....................................................
% increase to EIDL loan amount relative to the total amount of 3.8% 0.8% 1.5%
disaster loans in industries with increases to size standards *
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
accepting applications for new COVID EIDL loans or advances.
[[Page 35878]]
Growing small businesses that are close to exceeding the current
size standards will be able to retain their small business status for a
longer period under the higher size standards, thereby enabling them to
continue to benefit from the Federal small business assistance outside
of the contracting programs.
Based on its internal loan data for fiscal years 2018-2020, SBA
estimates that up to about 25 SBA 7(a) and CDC/504 loans totaling about
$11.6 million could be made to these newly-qualified small businesses
in those industries under the adopted increases to size standards. That
represents a 0.4% increase to the 7(a) and CDC/504 loan amount compared
to the baseline (see Table 6).
Newly-qualified small businesses will also benefit from the SBA's
EIDL program. Since the benefits provided through this program are
contingent on the occurrence and severity of a disaster in the future,
SBA cannot make a meaningful estimate of this impact. However, based on
the historical trends of the disaster loan program data, SBA estimates
that, on an annual basis, the newly-defined small businesses under the
increases to 57 size standards could receive three disaster loans
(except physical disaster loans, which are unaffected by the changes in
this rule), totaling about $0.2 million (see Table 6).
Additionally, the newly-defined small businesses would also benefit
through reduced fees, less paperwork, and fewer compliance requirements
that are available to small businesses through the Federal Government,
but SBA has no data to quantify this impact.
Costs of Increasing Size Standards
To the extent that newly-qualified small businesses could seek
assistance from SBA's financial assistance programs, the adopted
increases to size standards may entail some additional administrative
costs to the Government for the verification of their small business
status. However, small business lenders have an option of using the
tangible net worth and net income-based alternative size standard
instead of using the industry-based size standards to establish
eligibility for SBA's loans which many small businesses already qualify
under. Moreover, this rule does not establish new size standards for
the very first time; rather it intends to modify the existing size
standards in accordance with a statutory requirement and the latest
data and other relevant factors. For these reasons, SBA believes that
these added administrative costs will be minor because necessary
mechanisms are already in place to handle the additional requirements.
Transfer Impacts of Increasing Size Standards
The increases to size standards adopted in this final rule may
result in some redistribution of SBA loans between the newly-qualified
small businesses and small businesses under the current size standards.
However, SBA estimates this impact to be de minimis because the vast
majority of the SBA loans go to small businesses that are much smaller
than the current or adopted size standards. Moreover, this rule would
not have any impact on Federal contract dollars awarded to small
businesses since SBA's regulations specify that NAICS codes for the
Wholesale and Retail Trade industries shall not be used to classify
Government procurement for supplies.
3. What alternatives have been considered?
Under OMB Circular A-4, SBA is required to consider regulatory
alternatives to the adopted changes in this final rule. In this
section, SBA describes and analyzes two such alternatives. Alternative
Option One to the final rule, a more stringent alternative to the
adopted change, would propose adopting size standards based solely on
the analytical results. In other words, the size standards of 57
industries for which the analytical results suggest raising them would
be raised. However, the size standards of 66 industries for which the
analytical results suggest lowering them, as shown in Table 4 of the
May 2021 proposed rule, would be lowered. For the 14 remaining
industries for which analysis suggested no changes, size standards
would be maintained at their current levels. Alternative Option Two
would propose retaining size standards for all industries, given the
uncertainty generated by the ongoing COVID-19 pandemic. Below, SBA
discusses benefits, costs, and the net impacts of each option.
Alternative Option One: Adopting All Calculated Size Standards
As discussed previously in the Alternatives Considered section of
this final rule, Alternative Option One would cause a substantial
number of currently small businesses to lose their small business
status and hence to lose their access to Federal small business
assistance, especially SBA's financial assistance. These consequences
could be mitigated. For example, in response to the 2008 Financial
Crisis and the economic conditions that followed, SBA adopted a general
policy in the first five-year comprehensive size standards review to
not lower any size standard (except to exclude dominant firms) even
when the analytical results suggested the size standard should be
lowered. Currently, because of the economic challenges presented by the
COVID-19 pandemic and the measures taken to protect public health, SBA
has decided to adopt the same general policy of not lowering size
standards in the ongoing second five-year comprehensive size standards
review as well.
The primary benefits of adopting Alternative Option One would
include: (1) SBA's management, technical, and financial assistance
would be targeted to the most appropriate beneficiaries of such
programs according to the analytical results; (2) Adopting the size
standards based on the analytical results would also promote
consistency and predictability in SBA's implementation of its authority
to set or adjust size standards; and (3) Firms who would remain small
would face less competition from larger small firms for the remaining
Federal opportunities. Specifically, SBA sought public comment on the
impact of adopting the size standards based on the analytical results.
As explained in the ``Size Standards Methodology'' white paper, in
addition to adopting all results of the analysis of the primary
factors, SBA evaluates other relevant factors as needed, such as the
impact of the reductions or increases of size standards on the
distribution of SBA resources intended for small businesses and may
adopt different results with the intention of mitigating potential
negative impacts.
We have already discussed the benefits, costs, and transfer impacts
of increasing 57 and retaining 80 size standards. Below we discuss the
benefits, costs, and transfer impacts of decreasing 66, increasing 57,
and maintaining 14 size standards based on the analytical results.
Benefits of Decreasing Size Standards Under Alternative Option One
The most significant benefit to businesses from decreases to size
standards when SBA's analysis suggests such decreases is to ensure that
size standards are more reflective of latest industry structure and
current market trends and that Federal small business assistance is
more effectively targeted to its intended beneficiaries. These include
SBA's business loan and EIDL programs.
Decreasing size standards may reduce the administrative costs to
the Federal Government, because the risk of providing SBA's loans to
firms that do
[[Page 35879]]
not need them the most may diminish when the size standards reflect
better the structure of the market. This may provide a better chance
for smaller small firms to grow and benefit from the opportunities and
resources available through SBA.
Costs of Decreasing Size Standards Under Alternative Option One
Table 7, Impacts of Decreasing Size Standards Under Alternative
Option One, below, shows the various impacts of lowering size standards
in 66 industries based solely on the analytical results. Based on the
2012 Economic Census, more than 5,500 (1.0%) firms would lose their
small business status under Alternative Option One.
As shown in Table 7, decreasing size standards would have a
relatively minor impact on small businesses applying for SBA's 7(a) and
CDC/504 loans because a vast majority of such loans are issued to
businesses that are far below the reduced size standards. For example,
based on the loan data for fiscal years 2018-2020, SBA estimates that
67 of SBA's 7(a) and CDC/504 loans, totaling $32.5 million, could not
be made to those small businesses that would lose eligibility under the
reduced size standards. That represents a 1.1% decrease of the loan
amounts compared to the baseline. However, the actual impact could be
much less as businesses losing small business eligibility under the
decreases to industry-based size standards could still qualify for
SBA's 7(a) and CDC/504 loans under the tangible net worth and net
income-based alternative size standard.
Table 7--Impacts of Decreasing Size Standards Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
Sector 42 Sector 44-45 Total
----------------------------------------------------------------------------------------------------------------
No. of industries for which SBA considered decreasing size 38 28 66
standards (2012 Economic Census)...............................
Total current small businesses in industries for which SBA 184,837 343,639 528,476
considered decreasing size standards (2012 Economic Census)....
Estimated no. of firms losing small status for which SBA 2,735 2,774 5,509
considered decreasing size standards (2012 Economic Census)....
% of Firms losing small status relative to current small 1.5% 0.8% 1.0%
businesses in industries for which SBA considered decreasing
size standards.................................................
Total no. of 7(a) and 504 loans to small businesses in 1,829 3,464 5,293
industries for which SBA considered decreasing size standards
(FY 2018-2020).................................................
Total amount of 7(a) and 504 loans to small businesses in $1,176 $1,856 $3,032
industries for which SBA considered decreasing size standards
($ million) (FY 2018-2020).....................................
Estimated no. of 7(a) and 504 loans not available to firms that 28 23 51
would have lost small business status..........................
Estimated 7(a) and 504 loan amounts not available to firms that $18.0 $14.5 $32.5
would have small status ($ million)............................
% decrease to 7(a)and 504 loan amounts relative to the total 1.5% 0.8% 1.1%
amount of 7(a) and 504 loans in industries for which SBA
considered decreasing size standards...........................
Total no. of EIDL loans to small businesses in industries for 79 187 266
which SBA considered decreasing size standards (FY 2018-2020) *
Total amount of EIDL loans to small businesses in industries for $4.8 $9.0 $13.8
which SBA considered decreasing size standards ($ million) (FY
2018-2020) *...................................................
Estimated no. of EIDL loans not available to firms that would 2 3 5
have lost small business status *..............................
Estimated EIDL loan amount not available to firms that would $0.1 $0.1 $0.2
have lost small business status ($ million) *..................
% decrease to EIDL loan amount relative to the baseline *....... 2.5% 1.5% 1.8%
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
accepting applications for new COVID EIDL loans or advances.
Businesses losing small business status would also be impacted in
terms of access to loans through the SBA's EIDL program. However, SBA
expects such impact to be minimal as only a small number of businesses
in those industries received such loans during fiscal years 2018-2020.
Additionally, most of those businesses were below the reduced size
standards. Since this program is contingent on the occurrence and
severity of a disaster in the future, SBA cannot make a precise
estimate of this impact. However, based on the disaster loan data for
fiscal years 2018-2020, SBA estimates that, under Alternative Option
One, on an annual basis, five EIDL loans, totaling about $0.2 million,
would be unavailable to firms that no longer qualify as small under the
decreases to size standards. Table 7 shows these results by sector.
Small businesses becoming other than small if size standards were
decreased might lose the benefits of reduced fees, and paperwork and
compliance requirements that are available to small businesses through
the Federal Government programs, but SBA has no data to quantify this
impact. However, if agencies determine that SBA's size standards do not
adequately serve the needs of their programs, they can establish a
different size standard, with an approval from SBA, if they are
required to use SBA's size standards for such programs.
SBA may adopt mitigating measures to reduce the negative impact
under the Alternative Option One. SBA could adopt one or more of the
following three actions: (1) Accept decreases in size standards as
suggested by the analytical results; (2) Decrease size standards by a
smaller amount than the calculated values; and (3) Retain the size
standards at their current levels. For example, in response to the 2008
Financial Crisis, SBA adopted a general policy in the first five-year
comprehensive size standards review to not lower any size standard
(except to exclude dominant firms) even when the analytical results
suggested the size standard should be lowered. Currently, because of
the economic challenges presented by the COVID-19 pandemic and the
measures taken to protect public health, in this final rule, SBA has
decided to adopt the same general policy of not lowering size standards
in the ongoing second five-
[[Page 35880]]
year comprehensive size standards review as well.
Nevertheless, the impact on the overall loan activity is likely to
be de minimis because SBA estimates that the majority of firms
currently eligible for its loan programs would continue to remain
eligible under the reduced size standards. SBA's regulations specify
that NAICS codes for the Wholesale Trade and Retail Trade industries
shall not be used to classify Federal Government acquisition for
supplies (13 CFR 121.402(b)). As such, for purposes of Federal
contracting, the size standard for all industries in the Wholesale
Trade and Retail Trade sectors is 500 employees under SBA's
nonmanufacturer rule (13 CFR 121.406(b)). Thus, SBA estimates that any
decreases to size standards as part of this rulemaking will not impact
the market for Federal contracts.
Transfer Impacts of Decreasing Size Standards Under Alternative Option
One
If the size standards were decreased under Alternative Option One,
it may result in a redistribution of loans between the newly-qualified
small businesses and small businesses under the current size standards.
However, SBA estimates this impact to be de minimis as participants in
SBA's financial assistance programs are on average much smaller than
their industry size standards and SBA's loans are not disbursed based
on a competitive process. Moreover, this rule would not have an impact
on Federal contract dollars awarded to small businesses since SBA's
regulations specify that NAICS codes for the Wholesale and Retail Trade
industries shall not be used to classify Government acquisition for
supplies. While SBA cannot estimate with certainty the actual outcome
of the gains and losses among different groups of businesses from this
redistribution, it can identify several probable impacts. With a
smaller pool of small businesses under the decreases to size standards,
some SBA's resources to be otherwise awarded to small businesses may be
diverted to other uses or programs. However, since the total benefit
provided through this program is contingent on the availability of
funds and the occurrence and severity of a disaster in the future, SBA
cannot make a meaningful estimate of this impact.
Net Impact of Alternative Option One
To estimate the net impacts of adopting Alternative Option One, SBA
followed the same methodology used to evaluate the impacts of the
increasing size standards (see Table 6). However, under Alternative
Option One, SBA used the calculated size standards instead of the
adopted increases to determine the impacts of changes to current
thresholds. The impacts of the increases of size standards were already
shown in Table 6. Similarly, the impacts of the decreases of size
standards were also already presented in Table 7. Table 8, Net Impacts
of Size Standards Changes under Alternative Option One, presents the
net impacts of adopting the calculated size standards under Alternative
Option One.
Table 8--Net Impacts of Size Standards Changes Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
Sector 42 Sector 44-45 Total
----------------------------------------------------------------------------------------------------------------
No. of industries with changes to size standards................ 60 63 123
Total no. of small business under the current size standards 278,263 630,397 908,660
(2012 Economic Census).........................................
Additional firms qualifying as small under size standards (2012 -2,427 -1,080 -3,507
Economic Census)...............................................
% of additional firms qualifying as small relative to total -0.9% -0.2% -0.4%
current small businesses.......................................
Total no. of 7(a) and 504 loans to small businesses (FY 2018- 2,665 7,206 9,871
2020)..........................................................
Total amount of 7(a) and 504 loans to small businesses (FY 2018- $1,706 $3,732 $5,438
2020)..........................................................
Estimated no. of additional 7(a) and 504 loans to newly- -26 0 -26
qualified small firms..........................................
Estimated additional 7(a) and 504 loan amount to newly- -$16.7 -$4.2 -$20.9
qualified small firms ($ million)..............................
% increase to 7(a)and 504 loan amount relative to the total -1.0% -0.1% -0.4%
amount of 7(a) and 504 loans to small businesses...............
Total no. of EIDL loans to small businesses (FY 2018-2020) *.... 123 438 561
Total amount of EIDL loans to small businesses (FY 2018-2020) *. $7.4 $20.9 $28.3
Estimated no. of additional EIDL loans to newly-qualified small -1 -1 -2
firms *........................................................
Estimated additional EIDL loan amount to newly-qualified small -$0.04 -$0.01 -$0.01
firms ($ million) *............................................
% increase to EIDL loan amount relative to the total amount of -0.5% 0.0% 0.01%
EIDL loans to small businesses *...............................
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
accepting applications for new COVID EIDL loans or advances.
As shown in Table 8, based on the 2012 Economic Census, SBA
estimates that in 123 industries in NAICS Sectors 42 and 44-45 for
which the analytical results suggested to change size standards, about
3,500 firms would lose their small business size status under
Alternative Option One. That represents about 0.4% of all firms
classified as small under the current size standards in those
industries.
Based on SBA's loan data for fiscal years 2018-2020, the total
number of 7(a) and CDC/504 loans will decrease by 26 loans, while the
total loan amount will decrease by about $21 million. This is a 0.4%
decrease of the 7(a) and CDC/504 loan amounts relative to the baseline.
Firms' participation under SBA's EIDL loan program will be affected
as well. Since the benefit provided through this program is contingent
on the occurrence and severity of a disaster in the future, SBA cannot
make a precise estimate of this impact. However, based on the EIDL loan
program data for fiscal years 2018-2020, SBA estimates that the number
of EIDL loans will decrease by two loans, while the total loan amount
will decrease by about $0.01 million. This is a 0.01% decrease of the
EIDL loan amounts relative to the baseline. Table 8 provides these
results by NAICS sector.
Alternative Option Two: Retaining All Current Size Standards
Under this option, given the current COVID-19 pandemic, as
discussed elsewhere, SBA considered retaining the current levels of all
size standards even though the analytical results suggested changing
them. Under this option, as the current situation develops, SBA will be
able to assess new data available on economic indicators and SBA loans
as well. When compared to the baseline, there is a net impact of zero
(i.e., zero
[[Page 35881]]
benefit and zero cost) for retaining all size standards. However, this
option would cause otherwise qualified small businesses to forgo
various small business benefits (e.g., access to capital and other
benefits) that become available to them under the option of increasing
57 and retaining 80 size standards adopted in this final rule.
Moreover, retaining all size standards under this option would also be
contrary to the SBA's statutory mandate to review and adjust, every
five years, all size standards to reflect current industry and market
conditions. Retaining all size standards without required periodic
adjustments would increasingly exclude otherwise eligible small firms
from small business benefits.
Congressional Review Act
Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996 (codified at 5 U.S.C. 801-808), also known as the
Congressional Review Act or CRA, generally provides that before a rule
may take effect, the agency promulgating the rule must submit a rule
report, which includes a copy of the rule, to each House of the
Congress and to the Comptroller General of the United States. SBA will
submit a report containing this rule and other required information to
the U.S. Senate, the U.S. House of Representatives, and the Comptroller
General of the United States. A major rule under the CRA cannot take
effect until 60 days after it is published in the Federal Register.
OMB's Office of Information and Regulatory Affairs has determined that
this rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).
Final Regulatory Flexibility Analysis
According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-
612, when an agency issues a rulemaking, it must prepare a regulatory
flexibility analysis to address the impact of the rule on small
entities. This final rule may have a significant impact on a
substantial number of small businesses in the industries covered by
this final rule. As described above, this final rule may affect small
businesses seeking loans under SBA's 7(a), CDC/504, and EIDL loan
programs, and assistance under other Federal small business programs.
Immediately below, SBA sets forth a final regulatory flexibility
analysis (FRFA) of this final rule addressing the following questions:
(1) What is the need for, and objectives of the rule?; (2) What are
significant issues raised by the public comments in response to the
initial regulatory flexibility analysis, assessment of the agency of
such issues, and any changes made in the proposed rule as a result of
such comments?; (3) What's the agency's response to any comments filed
by the Chief Counsel for Advocacy of the Small Business Administration
in response to the proposed rule and description of any change made to
the proposed rule in the final rule as a result of the comments?; (4)
What is SBA's description and estimate of the number of small
businesses to which the rule will apply?; (5) What are the projected
reporting, record keeping, and other compliance requirements of the
rule?; (6) What are the relevant Federal rules that may duplicate,
overlap, or conflict with the rule?; (7) What alternatives will allow
SBA to accomplish its regulatory objectives while minimizing the
economic impact on small businesses?
1. What is the need for, and objectives, of the rule?
Changes in industry structure, technological changes, productivity
growth, mergers and acquisitions, and updated industry definitions have
changed the structure of many the industries covered by this final
rule. Such changes can be enough to support revisions to current size
standards for some industries. Based on the analysis of the latest data
available, SBA believes that the size standards adopted in this final
rule more appropriately reflect the size of businesses that need
Federal assistance. The 2010 Jobs Act also requires SBA to review every
five years all size standards and make necessary adjustments to reflect
market conditions.
2. What are the significant issues raised by the public comments in
response to the initial regulatory flexibility analysis, assessment of
the agency of such issues, and any changes made in the proposed rule as
a result of such comments?
SBA did not receive any public comments to the initial regulatory
flexibility analysis it provided in the proposed rule.
3. What is the agency's response to any comments filed by the Chief
Counsel for Advocacy of the Small Business Administration in response
to the proposed rule and description of any change made to the proposed
rule in the final rule as a result of the comments?
SBA did not receive any comments from the Chief Counsel for
Advocacy of the Small Business Administration in response to the
proposed rule.
4. What is SBA's description and estimate of the number of small
businesses to which the rule will apply, or an explanation of why no
such estimate is available?
Based on data from the 2012 Economic Census, SBA estimates that
there are about 380,184 small firms covered by this rulemaking under
industries with adopted changes to size standards. Under this final
rule, SBA estimates that an additional 2,000 businesses will be defined
as small.
5. What are the projected reporting, record keeping and other
compliance requirements of the rule?
The size standard changes in this final rule impose no additional
reporting or record keeping requirements on small businesses. However,
qualifying for Federal procurement and a number of other programs
requires that businesses register in the System for Award Management
(SAM) and self-certify that they are small at least once annually (48
CFR 52.204-13 (the Federal Acquisition Regulation (FAR)). For existing
contracts, small business contractors are required to update their SAM
registration as necessary to ensure that they reflect the contractor's
current status (FAR 52.219-28). Businesses are also required to verify
that their SAM registration is current, accurate, and complete with the
submission of an offer for every new contract (FAR 52.204-7 and 52.204-
8). Therefore, businesses opting to participate in those programs must
comply with SAM requirements. Changes in small business size standards
do not result in additional costs associated with SAM initial
registration or annual recertification. Changing size standards alters
the access to SBA's programs that assist small businesses but does not
impose a regulatory burden because they neither regulate nor control
business behavior.
6. What are the relevant Federal rules that may duplicate, overlap,
or conflict with the rule?
Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C.
632(a)(2)(c), Federal agencies must use SBA's size standards to define
a small business, unless specifically authorized by statute to do
otherwise. In 1995, SBA published in the Federal Register a list of
statutory and regulatory size standards that identified the application
of SBA's size standards as well as other size standards used by Federal
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any
Federal rule that would duplicate or conflict with establishing size
standards.
However, the Small Business Act and SBA's regulations allow Federal
agencies to develop different size standards if they believe that SBA's
size standards are not appropriate for their
[[Page 35882]]
programs, with the approval of SBA's Administrator (13 CFR 121.903).
The Regulatory Flexibility Act authorizes an agency to establish an
alternative small business definition, after consultation with the
Office of Advocacy of the U.S. Small Business Administration (5 U.S.C.
601(3)).
7. What alternatives will allow SBA to accomplish its regulatory
objectives while minimizing the impact on small entities?
By law, SBA is required to develop numerical size standards for
establishing eligibility for Federal small business assistance
programs. Other than varying size standards by industry and changing
the size measures, no practical alternative exists to the systems of
numerical size standards.
However, SBA considered two alternatives to increasing 57 and
maintaining 80 size standards at their current levels. The first
alternative SBA considered was adopting size standards revisions based
solely on the analytical results. In other words, the size standards of
57 industries for which the analytical results suggest raising size
standards would be raised. However, the size standards of 66 industries
for which the analytical results suggest lowering them would be
lowered. This would cause a significant number of small businesses to
lose their small business status in both Sectors 42 and 44-45 (see
Table 7). Under the second alternative, in view of the COVID-19
pandemic, SBA considered retaining all size standards at the current
levels, even though the analytical results suggested increasing 57 and
decreasing 66 size standards. SBA believes retaining all size standards
at their current levels would be more onerous for small businesses than
the option of increasing 57 and retaining 80 size standards. Postponing
the adoption of the higher calculated size standards in 57 industries
would be detrimental for otherwise small businesses in terms of access
to various small business benefits, including access to SBA's financial
assistance programs and exemptions from paperwork and other compliance
requirements.
Executive Order 13563
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, reducing costs, harmonizing rules, and promoting
flexibility. A description of the need for this regulatory action and
benefits and costs associated with this action, including possible
distributional impacts that relate to Executive Order 13563, is
included above in the Regulatory Impact Analysis under Executive Order
12866. Additionally, Executive Order 13563, section 6, calls for
retrospective analyses of existing rules.
The review of size standards in the industries covered by this
final rule is consistent with section 6 of Executive Order 13563 and
the 2010 Jobs Act, which requires SBA to review all size standards and
make necessary adjustments to reflect market conditions. Specifically,
the 2010 Jobs Act requires SBA to review at least one-third of all size
standards during every 18-month period from the date of its enactment
(September 27, 2010) and to review all size standards not less
frequently than once every five years, thereafter. SBA had already
launched a comprehensive review of size standards in 2007. In
accordance with the Jobs Act, in early 2016, SBA completed the first
five-year review of all small business size standards, except those for
agricultural enterprises previously set by Congress, and made
appropriate adjustments to size standards for a number of industries to
reflect current Federal and industry market conditions. Prior to 2007,
the last time SBA conducted a comprehensive review of all size
standards was during the late 1970s and early 1980s.
SBA issued a white paper entitled ``Size Standards Methodology''
and published a notification in the April 11, 2019, edition of the
Federal Register (84 FR 14587) to advise the public that the document
is available for public review. The ``Size Standards Methodology''
white paper explains how SBA establishes, reviews, and modifies its
receipts-based and employee-based small business size standards. The
methodology also provides descriptions of methodologies SBA employs to
adjust monetary-based size standards for inflation and to update size
standards to adopt the OMB's quinquennial NAICS revisions. SBA
considered all input, suggestions, recommendations, and relevant
information obtained from industry groups, individual businesses, and
Federal agencies in developing size standards for those industries
covered by this final rule. SBA received a total of nine comments to
the proposed rule. In the Discussion of Comments section of this final
rule, SBA summarizes comments received on the proposed rule and
provides its responses.
Executive Order 12988
This action meets applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
Executive Order 13132
For purposes of Executive Order 13132, SBA has determined that this
final rule will not have substantial, direct effects on the States, on
the relationship between the National Government and the States, or on
the distribution of power and responsibilities among the various levels
of government. Therefore, SBA has determined that this final rule has
no federalism implications warranting preparation of a federalism
assessment.
Paperwork Reduction Act
For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35,
SBA has determined that this final rule will not impose any new
reporting or record keeping requirements.
List of Subjects in 13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Grant programs--business, Individuals with
disabilities, Loan programs--business, Reporting and recordkeeping
requirements, Small businesses.
For the reasons set forth in the preamble, SBA amends 13 CFR part
121 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 is revised to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(a)(36), 662, and
694a(9); 15 U.S.C. 9012.
0
2. In Sec. 121.201, amend the table ``Small Business Size Standards by
NAICS Industry'' by revising entries ``423140,'' ''423330,''
``423460,'' ``423520,'' ``423620,'' ``423730,'' ``423740,'' ``423820,''
``423840,'' ``423850,'' ``423860,'' ``423920,'' ``423930,'' ``423940,''
``424110,'' ``424450,'' ``424520,'' ``424590,'' ``424690,'' ``424710,''
``425110,'' ``425120,'' ``441310,'' ``441320,'' ``442291,'' ``442299,''
``443141,'' ``444130,'' ``444210,'' ``444220,'' ``445291,'' ``445292,''
``445299,'' ``445310,'' ``446110,'' ``446130,'' ``446191,'' ``446199,''
``447190,'' ``448110,'' ``448150,'' ``448190,'' ``448310,'' ``448320,''
``451110,'' ``451120,'' ``451140,'' ``451211,'' ``451212,'' ``452311,''
``453220,'' ``453310,'' ``453910,'' ``453920,'' ``453998,'' ``454210,''
and ``454390'' to read as follows:
[[Page 35883]]
Sec. 121.201 What size standards has SBA identified by North American
Industry Classification System codes?
* * * * *
Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
Size standards Size standards
NAICS codes NAICS U.S. industry title in millions of in number of
dollars employees
----------------------------------------------------------------------------------------------------------------
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Sector 42--Wholesale Trade
----------------------------------------------------------------------------------------------------------------
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Subsector 423--Merchant Wholesalers, Durable Goods
----------------------------------------------------------------------------------------------------------------
* * * * * * *
423140..................... Motor Vehicle Parts (Used) Merchant Wholesalers.... .............. 125
* * * * * * *
423330..................... Roofing, Siding, and Insulation Material Merchant .............. 225
Wholesalers.
* * * * * * *
423460..................... Ophthalmic Goods Merchant Wholesalers.............. .............. 175
* * * * * * *
423520..................... Coal and Other Mineral and Ore Merchant Wholesalers .............. 200
* * * * * * *
423620..................... Household Appliances, Electric Housewares, and .............. 225
Consumer Electronics Merchant Wholesalers.
* * * * * * *
423730..................... Warm Air Heating and Air-Conditioning Equipment and .............. 175
Supplies Merchant Wholesalers.
423740..................... Refrigeration Equipment and Supplies Merchant .............. 125
Wholesalers.
* * * * * * *
423820..................... Farm and Garden Machinery and Equipment Merchant .............. 125
Wholesalers.
* * * * * * *
423840..................... Industrial Supplies Merchant Wholesalers........... .............. 125
423850..................... Service Establishment Equipment and Supplies .............. 125
Merchant Wholesalers.
423860..................... Transportation Equipment and Supplies (except Motor .............. 175
Vehicle) Merchant Wholesalers.
* * * * * * *
423920..................... Toy and Hobby Goods and Supplies Merchant .............. 175
Wholesalers.
423930..................... Recyclable Material Merchant Wholesalers........... .............. 125
423940..................... Jewelry, Watch, Precious Stone, and Precious Metal .............. 125
Merchant Wholesalers.
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Subsector 424--Merchant Wholesalers, Nondurable Goods
----------------------------------------------------------------------------------------------------------------
424110..................... Printing and Writing Paper Merchant Wholesalers.... .............. 225
* * * * * * *
424450..................... Confectionery Merchant Wholesalers................. .............. 225
* * * * * * *
424520..................... Livestock Merchant Wholesalers..................... .............. 125
424590..................... Other Farm Product Raw Material Merchant .............. 175
Wholesalers.
* * * * * * *
424690..................... Other Chemical and Allied Products Merchant .............. 175
Wholesalers.
424710..................... Petroleum Bulk Stations and Terminals.............. .............. 225
[[Page 35884]]
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Subsector 425--Wholesale Electronic Markets and Agents and Brokers
----------------------------------------------------------------------------------------------------------------
425110..................... Business to Business Electronic Markets............ .............. 125
425120..................... Wholesale Trade Agents and Brokers................. .............. 125
----------------------------------------------------------------------------------------------------------------
Sector 44-45--Retail Trade
----------------------------------------------------------------------------------------------------------------
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Subsector 441--Motor Vehicle and Parts Dealers
----------------------------------------------------------------------------------------------------------------
* * * * * * *
441310..................... Automotive Parts and Accessories Stores............ $25.0 ..............
441320..................... Tire Dealers....................................... 22.5 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 442--Furniture and Home Furnishings Stores
----------------------------------------------------------------------------------------------------------------
* * * * * * *
442291..................... Window Treatment Stores............................ 10.0 ..............
442299..................... All Other Home Furnishings Stores.................. 29.5 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 443--Electronics and Appliance Stores
----------------------------------------------------------------------------------------------------------------
443141..................... Household Appliance Stores......................... 19.5 ..............
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Subsector 444--Building Material and Garden Equipment and Supplies Dealers
----------------------------------------------------------------------------------------------------------------
* * * * * * *
444130..................... Hardware Stores.................................... 14.5 ..............
* * * * * * *
444210..................... Outdoor Power Equipment Stores..................... 8.5 ..............
444220..................... Nursery, Garden Center, and Farm Supply Stores..... 19.0 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 445--Food and Beverage Stores
----------------------------------------------------------------------------------------------------------------
* * * * * * *
445291..................... Baked Goods Stores................................. 14.0 ..............
445292..................... Confectionery and Nut Stores....................... 17.0 ..............
445299..................... All Other Specialty Food Stores.................... 9.0 ..............
445310..................... Beer, Wine, and Liquor Stores...................... 9.0 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 446--Health and Personal Care Stores
----------------------------------------------------------------------------------------------------------------
446110..................... Pharmacies and Drug Stores......................... 33.0 ..............
* * * * * * *
446130..................... Optical Goods Stores............................... 26.0 ..............
446191..................... Food (Health) Supplement Stores.................... 20.0 ..............
446199..................... All Other Health and Personal Care Stores.......... 8.5 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 447--Gasoline Stations
----------------------------------------------------------------------------------------------------------------
* * * * * * *
447190..................... Other Gasoline Stations............................ 29.5 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 448--Clothing and Clothing Accessories Stores
----------------------------------------------------------------------------------------------------------------
448110..................... Men's Clothing Stores.............................. 22.5 ..............
[[Page 35885]]
* * * * * * *
448150..................... Clothing Accessories Stores........................ 29.5 ..............
448190..................... Other Clothing Stores.............................. 27.5 ..............
* * * * * * *
448310..................... Jewelry Stores..................................... 18.0 ..............
448320..................... Luggage and Leather Goods Stores................... 33.5 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 451--Sporting Good, Hobby, Book and Music Stores
----------------------------------------------------------------------------------------------------------------
451110..................... Sporting Goods Stores.............................. 23.5 ..............
451120..................... Hobby, Toy, and Game Stores........................ 31.0 ..............
* * * * * * *
451140..................... Musical Instrument and Supplies Stores............. 20.0 ..............
451211..................... Book Stores........................................ 31.5 ..............
451212..................... News Dealers and Newsstands........................ 20.0 ..............
----------------------------------------------------------------------------------------------------------------
Subsector 452--General Merchandise Stores
----------------------------------------------------------------------------------------------------------------
* * * * * * *
452311..................... Warehouse Clubs and Supercenters................... 41.5 ..............
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Subsector 453--Miscellaneous Store Retailers
----------------------------------------------------------------------------------------------------------------
* * * * * * *
453220..................... Gift, Novelty, and Souvenir Stores................. 12.0 ..............
453310..................... Used Merchandise Stores............................ 12.5 ..............
453910..................... Pet and Pet Supplies Stores........................ 28.0 ..............
453920..................... Art Dealers........................................ 14.5 ..............
* * * * * * *
453998..................... All Other Miscellaneous Store Retailers (except 10.0 ..............
Tobacco Stores).
----------------------------------------------------------------------------------------------------------------
Subsector 454--Nonstore Retailers
----------------------------------------------------------------------------------------------------------------
* * * * * * *
454210..................... Vending Machine Operators.......................... 18.5 ..............
* * * * * * *
454390..................... Other Direct Selling Establishments................ 13.0 ..............
* * * * * * *
----------------------------------------------------------------------------------------------------------------
* * * * *
Isabella Casillas Guzman,
Administrator.
[FR Doc. 2022-12512 Filed 6-13-22; 8:45 am]
BILLING CODE 8026-03-P
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