The U.S. Small Business Administration (SBA) has issued a final rule to adopt, without change, its July 28, 2023 proposed rule (88 FR 48739) adopting the current statutory alternative size standard for its 7(a) Business and Certified Development Company (CDC/504) Loan Programs (collectively “Business Loan Programs”), subject to a 34.46 percent adjustment for inflation that has occurred since the establishment of the statutory alternative size standard in 2010. The inflation adjustment increases the size standard's level for tangible net worth to $20 million and for net income to $6.5 million (89 FR 11703; February 15, 2024).
Under this final rule, SBA is also adopting adjustments for inflation to the applicable statutory limits for contract size under the Surety Bond Guarantee (SBG) Program. The adjustment increases the contract limit to $9 million and the contract limit for Federal contracts if a Federal contracting officer certifies that such a guarantee is necessary to $14 million.
SBA estimates that, as a result of these changes, certain businesses, especially in industries with receipts-based size standards, will gain eligibility for SBA's Business Loan Programs for which they would not otherwise be eligible based on their industry-specific size standards. SBA also estimates that raising the contract bond limits could lead to larger contracts being guaranteed by the SBA and, as a result, could increase the risk of program losses.
SBA received 13 comments on the proposed rule from various trade associations, businesses, and individual stakeholders. Generally, these commenters expressed strong support for SBA's proposed changes without reservation. You may review the proposed rule together with all of the comments submitted at Regulations.gov. The proposed rule and the comments are included in the same docket.
The changes contained in the final rule are effective March 18, 2024.