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Federal Register / Vol. 86, No. 209 / Tuesday, November 2, 2021 / Proposed Rules
increases to the 7a and 504 loan amount in the baseline.
Newly qualified small businesses and those with extended small business status under the 24-month averaging period may also benefit from the SBAs disaster loan program. However, since the benefit provided through this program is contingent on the occurrence and severity of a disaster in the future, SBA cannot make a meaningful estimate of this impact. Based on the historical trends of the SBAs disaster loan data which shows that firms receiving loans under employee-based size standards are well below the industry size thresholds, SBA estimates that newly defined small businesses and small businesses extending small business status for a longer period would not receive any additional disaster loans under the proposed change.
The added competition from more businesses qualifying as small may result in lower prices to the Federal Government for procurements set aside or reserved for small businesses, but SBA cannot quantify this impact. Costs could be higher when full and open contracts are awarded to HUBZone businesses that receive price evaluation preferences. However, with agencies likely setting aside more contracts for small businesses in response to a larger pool of small businesses under the proposed change, HUBZone firms might actually end up getting more set-aside contracts and fewer full and open contracts, thereby resulting in some cost savings to Federal agencies. While SBA
cannot estimate such costs savings, as it is impossible to determine the number and value of unrestricted contracts to be otherwise awarded to HUBZone firms that will be awarded as set-asides, such cost savings are likely to be relatively small as only a small fraction of full and open contracts are awarded to HUBZone businesses.
Additionally, the newly defined small businesses, as well as those with a longer small business status, would also benefit from reduced fees, less
paperwork, and fewer compliance requirements but SBA has no data to quantify this impact.
The proposed change will also address some of the challenges and uncertainties small businesses face in the open market once they graduate from their small business status. Small and mid-size businesses experience a considerable disadvantage in competing for full and open contracts against large businesses, including the largest in the industry. These large businesses often have several competitive advantages over small and mid-size firms, including vast past performance qualifications and experience, strong brand-name recognition, a plethora of professional certifications, security clearances, and greater financial and marketing resources. Small and mid-size businesses cannot afford to maintain these resources, leaving them at a considerable disadvantage.
With contracts getting bigger, one large set-aside contract could throw a firm out of its small business size status, thereby subjecting it to certain requirements that apply to other-thansmall firms, such as developing subcontracting plans. That firm may not have the infrastructure, existing business processes, and/or other resources in place in order to comply with such requirements. This may also result in constant shuffling between small and other-than-small status.
By allowing smaller mid-size companies that have just exceeded the size threshold to regain small business status and advanced small businesses close to size standards to prolong their small business status for a longer period, this proposed rule can expand the pool of qualified small firms for agencies to draw upon to meet their small business requirements.
2. Expansive Effects of Changing the Averaging Period for Receipts From 3
Years to 5 Years The most significant benefits to businesses from the change in the
period for calculation of average annual receipts from 3 years to 5 years include:
i Enabling some mid-size businesses currently categorized above their corresponding size standards to gain or regain small business status and thereby qualify for participation in Federal assistance intended for small businesses, including access to SBAs financial assistance and ii allowing some advanced and larger small businesses close to their size thresholds to lengthen their small business status for a longer period and thereby continue their participation in SBAs Business Loan, Disaster Loan and SBIC Programs.
Benefits accruing to businesses gaining and extending small business status are presented below in Table 14, Expansive Impacts of Changing the Averaging Period for Receipts from 3
Years to 5 Years. The results in Table 14 pertain to businesses and industries subject to SBAs receipts-based size standards only.
As shown in Table 14, of 42,536 firms not currently considered small in any receipts-based size standards, 3,320 or 6.4 percent would benefit from the proposed change by gaining or regaining small business status under the 5-year receipts average in at least one NAICS
industry that is subject to a receiptsbased size standard. Additionally, nearly 3,600 or 1.2 percent of small businesses within 10 percent below size standards would see their annual receipts decrease under the 5-year averaging period, consequently enabling them to keep their small business status for a longer period.
Using the 2012 Economic Census, SBA estimated that more than 5,900 or 3.3 percent of currently large businesses would gain or regain small business status and more than 61,250 or 0.9
percent of total small businesses would see their small business status extended for a longer period as the result of this proposed rule. These results are shown in Table 14, below.

TABLE 14EXPANSIVE IMPACTS OF CHANGING THE AVERAGING PERIOD FOR RECEIPTS FROM 3 YEARS TO 5 YEARS
Firms gaining small business status
jspears on DSK121TN23PROD with PROPOSALS1

Impact of proposed change Number of impacted industries
Number of large firms becoming small or/and small firms extending small business statusSAM as of Sept 1, 2019
Large firms becoming small or/and small firms with extended small business status as % of total large or/and small firms in the baselineSAM as of Sept 1, 2019
Number of large firms becoming small or/and small firms extending small business status2012 Economic Census
Large firms becoming small or/and small firms extending small business status as %
of total large or/and small firms in the baseline2012 Economic Census

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Firms extending small business status
Total expansive impact
377

382

1 447

3,320

3,579

2 6,542

6.35

1.22

1.95

5,938

61,263

67,201

3.3%

0.9%

0.9%

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