The U.S. Small Business Administration made help available to more businesses last week.
An interim rule changes how the SBA views companies for funding opportunities. Monetary-based standards like a companies’ assets and net worth have been adjusted for inflation. The last time the SBA adjusted its monetary-based standards was in 2008.
The SBA estimates more than 8,400 additional businesses will gain small business status with the adjusted standards and become eligible for the SBA’s financial and federal government procurement programs, according to an agency press release.
“The Alliance is pleased that the SBA has expanded the scope of this program which will open these programs to potentially more small businesses,” said Charleston Area Alliance president Matt Ballard. “West Virginia is a state made up of small businesses, so the potential for business is there.”
The interim rule takes effect July 14 and may still be amended.
Ballard spoke with SBA officials Friday, June 13, about lending in West Virginia.
From January through the end of May, the SBA approved 109 loans in West Virginia totaling $34 million, Ballard said. During the same time frame in 2013, the SBA approved 127 loans totaling $20 million.
“While expanding access is a positive step, there are a host of other capital challenges facing businesses today,” Ballard said. “Specifically, there is still much to do regarding access to capital for new ventures. In West Virginia, positive developments, such as the Angel Investment Network as well as crowd funding programs, are improving options.”
There is more work to be done on improving access to capital in the state but each movement forward helps, Ballard added.
Chris Hatch, regional communications director for the SBA, said the agency tries to review the monetary size standards at least every five years.
“We cannot do it more frequently because the changes would be too small, and results would be uneven,” Hatch said. “We have to wait, generally about five years, for these to be a noticeable significant change.”
The Jobs Act of 2010 mandated the SBA review the monetary standards in addition to its own regulations.
The rule clarifies a size standard exception for the four types of real estate industries — lessors of residential buildings and dwellings, lessors of nonresidential buildings, lessors of mini warehouses and self storage units and lessors of other real estate property — when leasing property directly to the federal government.
Hatch said lessors of other real estate property have a current $25.5 million size standard, as do the other three real estate industries. However, the SBA has always had a higher standard in real estate property known as leasing of building space by owners. With the rule changes, the SBA will evaluate a business in any of the four real estate industries at the higher standard, but only when leasing directly to the federal government.
“That provides small business eligibility to more businesses,” Hatch said. “Those that were not small in the other codes, if they meet the new, higher standard, can be small to rent to the government.”
The SBA said the changes could lead to more than $150 million to $200 million in additional federal government contracts awarded to small businesses and 80 additional loans totaling about $30 million.
Reach Caitlin Cook at firstname.lastname@example.org or 304-348-5113.