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Federal Register / Vol. 86, No. 209 / Tuesday, November 2, 2021 / Proposed Rules
TABLE 2DISTRIBUTION OF BUSINESS CONCERNS SUBJECT TO EMPLOYEE-BASED SIZE STANDARDS BY NUMBER OF
NAICS CODES
Total firms in 2019 SAM
with at least one employee-based NAICS code
Number of NAICS codes
Count
Matched firms between 2019 and 2018 SAM
Count
%

%

1 NAICS code
2 to 5 NAICS codes
6 to 10 NAICS codes
>10 NAICS codes

70,200
61,266
13,540
7,444

46.0
40.2
8.9
4.9

57,498
52,599
11,798
6,704

44.7
40.9
9.2
5.2

Total

152,450

100.0

128,599

100.0

Note: A business concern is defined in terms of a unique local vendor DUNS number.

jspears on DSK121TN23PROD with PROPOSALS1

A central premise of Public Law 116
283 is that a 24-month employee average as opposed to a 12-month employee average would enable some mid-size businesses who have recently exceeded the size standard to regain small business status and some advanced small businesses close to exceeding the size standard to retain their small business status for a longer period. However, this premise would only hold true when businesses monthly employees are rising. When businesses monthly employees are declining, due to economic downturns or other factors, the 24-month employee average could be higher than the 12month employee average, thereby causing small businesses close to their size standards based on the 12-month average to lose their small business status sooner. In some cases where the 24-month employee average could be higher than the size standard, thereby forcing small businesses to lose their small status immediately when the longer 24-month averaging period becomes effective. Additionally, such businesses with declining employees
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would have to wait longer to regain their small business status.
ii. Potential Effects of Changing the Calculation of Receipts Changing the periods for calculating average annual receipts from 3 years to 5 years, pursuant to Public Law 115
324, may enable some mid-size businesses that have just exceeded size standards to regain small business status. Similarly, it could also allow some advanced and larger small businesses about to exceed size standards to retain their small business status for a longer period. However, it could also result in some advanced small businesses having a 5-year receipts average that happens to be higher than the 3-year receipts average, thus ejecting them out of their small business status sooner. To mitigate this negative impact, SBA proposes to allow applicants to its Business Loan, Disaster Loan, and SBIC Programs to choose either a 3-year average or a 5-year average. Thus, an applicant might be eligible for assistance if its 5-year average is equal to or less than the size standard, even if it would otherwise be
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ineligible under the 3-year average.
Detailed impacts of the proposed change are discussed below.
It is difficult to determine the actual number of small and mid-size businesses that would be impacted by Public Law 115324 and this regulatory action because there is no annual data on receipts of businesses. The annual receipts data from the Economic Census special tabulation are only available once every 5 years. Similarly, the System for Award Management SAM
only records the data on 3-year average annual receipts of businesses over their 3 preceding fiscal years, but not their annual receipts for each fiscal year. For example, the receipts data for year 2019
is an average of annual receipts for 2018, 2017, and 2016. Similarly, the receipts data for 2018 is an average of annual receipts for 2017, 2016, and 2015, and so on. A 5-year receipts average for 2019 would be an average of annual receipts for 2018, 2017, 2016, 2015, and 2014.
Given the lack of annual receipts for each year, SBA approximated a firms 5year average annual revenue for 2019 as follows:

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