Photo by Austin Distel on Unsplash

The U.S. Small Business Administration (SBA) has published a proposal to revise its method in the computation of annual average revenues that are used to classify small businesses. The agency proposed to change the revenue calculation from a three-year to a five-year averaging period.

The proposal is based on the Small Business Runway Extension Act of 2018 which changed requirements for business size standards. This law aims to provide small business federal contractors enough time to prepare for the transition to the open market once they have exceeded the size standard.

If the proposed change is implemented, some small businesses may lose their small business status or have it shortened. Some business may also retain or regain their small business status for SBA’s loan program and federal procurement.