Bigger Window for Small Businesses

Good news for small businesses seeking federal government grants or contracts: on January 6, the Small Business Administration (SBA) issued a final rule to implement the Small Business Runway Extension Act. The rule formally extends by two years the time period that the SBA and other agencies analyze to determine a business's size status for purposes of eligibility for federal grants and small business set-aside contracts. 

The final rule includes a two-year transition period lasting until January 6, 2022. During this transition, small businesses may choose between using the old three-year period or the new five-year period when calculating their average annual receipts for the purposes of meeting size standards. The rule will be beneficial for mid-sized businesses that have just exceeded the size standards and are looking to regain their small business status. For example, a business that experienced a substantial decrease in revenue due to the expiration of a large contract or task order might be able to remain small by choosing a three-year lookback, i.e., by cutting off from the lookback period the previous two years of higher revenue.

The rule is also advantageous for small businesses that are close to exceeding the size standards but want to retain their small status for a bit longer. Such businesses may now have more time to decide whether to curtail their growth in order to remain eligible for small business set-asides, to sell to a large business, or to become large and compete under federal solicitations in the open market. 

If you are a small business interested in federal grants or contracts, please contact Bill Speros or another attorney in the Government Services group at our Firm.