SBA Proposed Rule Revised Timeframe For Receipt Calculation In Size Determinations

Responding to statutory requirements in the 2018 Small Business Runway Extension Act, the Small Business Administration (SBA) issued a proposed rule on June 24, 2019 to adjust its regulations on the calculation of average annual receipts in small business size determinations. This change would increase the size determination review period from three years to five years and would apply to other agencies' proposed size standards for service-industry concerns that are subject to "receipt based size standards." The proposed rule can be found here. The SBA proposed this change to "promote consistency government-wide" for size standards.

The proposed rule will change only the period over which SBA will calculate a company's average annual receipts, and will not change the SBA's method of aggregating those receipts. Now, if a company has been in business for five or more years, the SBA will calculate the company's total receipts over the five-year period and divide by five.