[Federal Register Volume 87, Number 114 (Tuesday, June 14, 2022)]
[Rules and Regulations]
[Pages 35869-35885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12512]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AH10


Small Business Size Standards: Wholesale Trade and Retail Trade

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is increasing its 
receipts-based and employee-based small business size definitions 
(commonly referred to as ``size standards'') for North American 
Industry Classification System (NAICS) sectors related to Wholesale 
Trade and Retail Trade. Specifically, SBA is increasing size standards 
for 57 industries in those sectors, including 22 industries in NAICS 
Sector 42 (Wholesale Trade) and 35 industries in NAICS Sector 44-45 
(Retail Trade).

DATES: This rule is effective July 14, 2022.

FOR FURTHER INFORMATION CONTACT: Samuel Castilla, Economist, Office of 
Size Standards, (202) 619-0389 or <a href="/cdn-cgi/l/email-protection#90e3f9eaf5e3e4f1fef4f1e2f4e3d0e3f2f1bef7ffe6"><span class="__cf_email__" data-cfemail="75061c0f100601141b1114071106350617145b121a03">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Discussion of Size Standards

    To determine eligibility for Federal small business assistance, SBA 
establishes small business size definitions (usually referred to as 
``size standards'') for private sector industries in the United States. 
SBA uses two primary measures of business size for size standards 
purposes: average annual receipts and average number of employees. SBA 
uses financial assets for certain financial industries and refining 
capacity, in addition to employees, for the petroleum refining industry 
to measure business size. In addition, SBA's Small Business Investment 
Company (SBIC), Certified Development Company (CDC/504), and 7(a) Loan 
Programs use either the industry-based size standards or tangible net 
worth and net income-based alternative size standards to determine 
eligibility for those programs.
    In September 2010, Congress passed the Small Business Jobs Act of 
2010 (Pub. L. 111-240, 124 Stat. 2504, September 27, 2010) (``Jobs 
Act''), requiring SBA to review all size standards every five years and 
make necessary adjustments to reflect current industry and market 
conditions. In accordance with the Jobs Act, in early 2016, SBA 
completed the first five-year review of all size standards--except 
those for agricultural enterprises for which size standards were 
previously set by Congress--and made appropriate adjustments to size 
standards for a number of industries to reflect current industry and 
Federal market conditions. SBA also adjusts its monetary-based size 
standards for inflation at least once every five years. An interim 
final rule on SBA's latest inflation adjustment to size standards, 
effective August 19, 2019, was published in the Federal Register on 
July 18, 2019 (84 FR 34261). SBA also updates its size standards every 
five years to adopt the Office of Management and Budget's (OMB) 
quinquennial North American Industry Classification System (NAICS) 
revisions to its table of small business size standards. Effective 
October 1, 2017, SBA adopted the OMB's 2017 NAICS revisions to its size 
standards (82 FR 44886 (September 27, 2017)).\1\
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    \1\ On December 21, 2021, the U.S. Office of Management and 
Budget (OMB) published its ``Notice of NAICS 2022 Final Decisions . 
. .'' (86 FR 72277), accepting the Economic Classification Policy 
Committee (ECPC) recommendations, as outlined in the July 2, 2021, 
Federal Register notice (86 FR 35350), for the 2022 revisions to the 
North American Industry Classification System (NAICS), . . . .'' In 
the near future, SBA will issue a proposed rule to adopt the OMB's 
NAICS 2022 revisions for its table of size standards. SBA 
anticipates updating its size standards with the NAICS 2022 
revisions, effective October 1, 2022.
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    This final rule is one of a series of final rules that will revise 
size standards of industries grouped by various NAICS sectors. Rather 
than revise all size standards at one time, SBA is revising size 
standards by grouping industries

[[Page 35870]]

within various NAICS sectors that use the same size measure (i.e., 
employees or receipts). Although the industries in Sectors 42 and 44-45 
have both receipt-based and employee-based industry size standards, SBA 
is evaluating these sectors together because these size standards share 
the characteristic that they cannot be used in Federal contracts for 
supplies. Instead, by rule, these size standards are superseded by a 
500-employee size standard for Federal contracts in the Wholesale and 
Retail Trade sectors. In the prior review, SBA revised size standards 
mostly on a sector-by-sector basis. As part of the second five-year 
review of size standards, SBA reviewed all receipt-based and employee-
based size standards in NAICS Sectors 42 and 44-45 to determine whether 
the existing size standards should be retained or revised based on the 
current industry and program data. After its review, SBA published in 
the May 25, 2021, issue of the Federal Register (86 FR 28012) a 
proposed rule to increase the size standards for 14 industries in NAICS 
Sector 42 (Wholesale Trade) and 35 industries in NAICS Sector 44-45 
(Retail Trade). In this final rule, SBA is adopting the proposed size 
standards from the May 2021 proposed rule without change, except for 
eight industries in Sector 42 for which SBA is increasing size 
standards instead of maintaining them as proposed after refining its 
analysis of the economic characteristics of the comparison industry 
group.
    In conjunction with the ongoing second five-year review of size 
standards under the Jobs Act, SBA developed a revised ``Size Standards 
Methodology'' (Methodology) for developing, reviewing, and modifying 
size standards, when necessary. SBA's revised Methodology provides a 
detailed description of its analyses of various industry and program 
factors and data sources, and how the agency uses the results to 
establish and revise size standards. In the May 2021 proposed rule 
itself, SBA detailed how it applied its revised Methodology to review 
and modify where necessary, the existing size standards for industries 
covered in this final rule. Prior to finalizing the revised 
Methodology, SBA issued a notification in the April 27, 2018, edition 
of the Federal Register (83 FR 18468) to solicit comments from the 
public and notify stakeholders of the proposed changes to the 
Methodology. SBA considered all public comments in finalizing the 
revised Methodology. For a summary of comments and SBA's responses, 
refer to SBA's April 11, 2019, Federal Register notification (84 FR 
14587) of the issuance of the final revised Methodology. SBA's Size 
Standards Methodology is available on its website at www.sba.gov/size.
    In evaluating an industry's size standard, SBA normally examines 
its characteristics (such as average firm size, startup costs and entry 
barriers, industry competition, and distribution of firms by size) and 
the level and small business share of Federal contract dollars in that 
industry. However, since NAICS codes in the Wholesale Trade and Retail 
Trade sectors cannot be used to classify Federal Government procurement 
for supplies, and only the applicable manufacturing code can be 
applied, the Federal contracting factor is not considered in evaluating 
industry-based size standards for these sectors (13 CFR 121.402(b)). 
SBA also examines the potential impact a size standard revision might 
have on its financial assistance programs, and whether a business 
concern under a proposed or revised size standard would be dominant in 
its industry.
    SBA analyzed the characteristics of each industry in NAICS Sectors 
42 and 44-45, mostly using a special tabulation obtained from the U.S. 
Bureau of the Census from its 2012 Economic Census (the latest 
available when the proposed rule was prepared). The 2012 special 
tabulation contains information for different levels of NAICS 
categories on average (simple and weighted average) and median firm 
size in terms of both receipts and employment, total receipts generated 
by the four and eight largest firms, the Herfindahl-Hirschman Index 
(HHI), the Gini coefficient, and size distributions of firms by various 
receipts and employment size groupings. To evaluate average asset size, 
SBA combines the sales to total assets ratios by industry, obtained 
from the Risk Management Association's (RMA) Annual eStatement Studies 
(https://www.rmahq.org/statementstudies/) with the simple average 
receipts size by industry from the 2012 Economic Census tabulation to 
estimate the average assets size for each industry.
    Table 5 of the May 2021 proposed rule, Size Standards Supported by 
Each Factor for Each Industry (Employees) and Table 6, Size Standards 
Supported by Each Factor for Each Industry (Receipts), show the results 
of analyses of industry factors for each industry covered by the 
proposed rule. Of the 137 industries, including 71 in Sector 42 and 66 
in Sector 44-45, reviewed in the proposed rule, the results from 
analyses of the latest available data on the four primary industry 
factors (i.e., average firm size, average assets size, four-firm ratio, 
and Gini coefficient) supported increasing size standards for 49 
industries (14 in Sector 42 and 35 in Sector 44-45), decreasing size 
standards for 66 industries (38 in Sector 42 and 28 in Sector 44-45), 
and maintaining size standards for 22 industries (19 in Sector 42 and 3 
in Sector 44-45). Table 1, Summary of Calculated Size Standards, 
summarizes the analytical results from the proposed rule by NAICS 
sector.

                                                      Table 1--Summary of Calculated Size Standards
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                                                                                       Number of size   Number of size   Number of size   Number of size
                     Sector                                   Sector name                standards        standards        standards        standards
                                                                                          reviewed        increased        decreased        maintained
--------------------------------------------------------------------------------------------------------------------------------------------------------
42..............................................  Wholesale Trade...................               71               14               38               19
44-45...........................................  Retail Trade......................               66               35               28                3
                                                                                     -------------------------------------------------------------------
    Total.......................................  ..................................              137               49               66               22
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    In the May 2021 proposed rule, SBA discussed the impacts of the 
COVID-19 pandemic on small businesses and greater society. Recognizing 
the wide-ranging economic impacts of the pandemic, SBA decided not to 
lower any size standards for which the analysis suggested lowering 
them. Instead, SBA proposed to maintain all size standards for 
industries in which the analytical results supported a decrease or no 
change to size standards and adopt all size standards for which the 
analytical results supported an increase to size standards. In this 
final rule, SBA is adopting the proposed size standards from the May 
2021 proposed rule without change, except for eight

[[Page 35871]]

industries in Sector 42 for which SBA is increasing size standards 
instead of maintaining them as proposed after refining its analysis of 
the economic characteristics of the comparison industry group in 
accordance with its ``Size Standards Methodology.'' Specifically, SBA 
is increasing the size standards for the following eight additional 
NAICS industries from 100 employees to 125 employees: NAICS 423740 
(Refrigeration Equipment and Supplies Merchant Wholesalers); NAICS 
423820 (Farm and Garden Machinery and Equipment Merchant Wholesalers); 
NAICS 423840 (Industrial Supplies Merchant Wholesalers); NAICS 423850 
(Service Establishment Equipment and Supplies Merchant Wholesalers); 
NAICS 423930 (Recyclable Material Merchant Wholesalers); NAICS 423940 
(Jewelry, Watch, Precious Stone, and Precious Metal Merchant 
Wholesalers); NAICS 424520 (Livestock Merchant Wholesalers); and NAICS 
425110 (Business to Business Electronic Markets).
    To evaluate the impact of the changes to size standards adopted in 
this final rule on SBA's loan programs, SBA analyzed its internal data 
on its guaranteed and disaster loan programs for fiscal years 2018-
2020. The results of this analysis can be found in the Regulatory 
Impact Analysis section of this final rule. The impact of these changes 
is limited to SBA's loan programs because, as discussed above, these 
size standards do not apply to Federal procurements, such as those in 
SBA's contracting programs.
    In the May 2021 proposed rule, SBA sought comments on its proposal 
to increase size standards for 49 industries and retain the current 
size standards for the remaining 88 industries in Sectors 42 and 44-45. 
Specifically, SBA requested comments on whether the proposed revisions 
are appropriate for the industries covered by the proposed rule; 
whether the decision not to lower any size standards is justified by 
the COVID-19 pandemic; whether the equal weighting of individual 
factors to derive an industry size standard is appropriate; and whether 
the data sources used were appropriate or sufficient.

Discussion of Comments

    SBA received a total of nine comments to the proposed rule, of 
which four were not pertinent. Of the remaining five comments that were 
pertinent to the rule, two comments expressed support for the proposed 
changes to size standards in general, one comment supported SBA's 
proposed change for the size standard for convenience store-related 
industries, one comment raised concern regarding SBA's proposal to 
retain the 500-employee size standard applicable to nonmanufacturers 
for purposes of Federal contracting, and one comment opposed the 
proposed changes. All comments to the proposed rule are available at 
www.regulations.gov (RIN 3245-AH10) and are summarized and discussed 
below.

Comments Supporting SBA's Proposed Changes to Both Sectors

    SBA received two comments supporting SBA's proposed changes to size 
standards in both Wholesale Trade and Retail Trade sectors. One 
commenter supported the rule because they viewed size limits as an 
important tool for defining small businesses. The second commenter 
supported the rule on the grounds that it would result in more 
assistance to small businesses in the form of increased SBA loans and 
Federal contracting opportunities.
SBA's Response
    SBA agrees with the comment that size limits are an important tool 
for defining small businesses for eligibility for Federal small 
business assistance. SBA's proposed changes will help more businesses 
qualify as small and ensure that SBA's resources and assistance are 
directed to their intended beneficiaries. SBA also agrees with the 
comment expressing support for the rule on the grounds that it would 
result in more assistance to small businesses in the form of increased 
financial assistance and Federal contracting opportunities. As shown in 
Table 6 in the Regulatory Impact Analysis section of the rule, below, 
SBA estimates that the changes to size standards in this final rule 
will result in an increase to the number of 7(a) and CDC/504 and 
Economic Injury Disaster Loan (EIDL) loans to small firms. Moreover, 
although industries within Sectors 42 and 44-45 cannot be used for 
purposes of classifying Federal contracting opportunities, SBA believes 
that all small businesses will benefit from this rule in terms of 
access to its financial assistance that is available for small 
businesses. Therefore, SBA is adopting increases to 49 size standards 
from the proposed rule plus increases to eight additional size 
standards based on its reevaluation of analytical results, as discussed 
above.

Comment Supporting Proposed Changes to the Convenience Services 
Industry

    SBA received one comment from an association representing the U.S. 
convenience services industry, including owners and operators of 
vending machines and micro markets, expressing support for SBA's 
changes to size standards for the industries it represents. The 
commenter did not specify which 6-digit NAICS industries were the focus 
of their comment, but based on industry descriptions in the NAICS 
manual, SBA assumed the comment pertained to NAICS 445120 (Convenience 
Stores), NAICS 447110 (Gasoline Stations with Convenience Stores), 
NAICS 454210 (Vending Machine Operators), and NAICS 454390 (Other 
Direct Selling Establishments). The association supported SBA's 
proposed changes to size standards in these industries on the grounds 
that the changes would expand eligibility for SBA's assistance to 
operators that were previously ineligible to participate in SBA's 
programs and to those who may have experienced economic hardships 
related to the COVID-19 pandemic.
SBA's Response
    In the May 2021 proposed rule, SBA proposed to increase the size 
standards for NAICS 454210 and 454390 from $12 million and $8 million 
to $18.5 million and $13 million, respectively. For NAICS 445120 and 
447110, in response to the unprecedented economic impacts of the 
ongoing COVID-19 pandemic on small businesses and Federal Government 
response, in the May 2021 proposed rule, SBA proposed to retain their 
size standards at $32 million instead of decreasing them to $8.5 
million and $21 million, respectively, based on analytical results. SBA 
agrees with the association that these changes will help more small 
businesses in these industries qualify for SBA's financial assistance. 
SBA believes that expanding the reach of its programs to include a 
greater number of small firms supports all small businesses and the 
overall economy as the Nation continues to recover from the economic 
challenges caused by the COVID-19 pandemic and small businesses remain 
in need of SBA's assistance as they recover from the pandemic. SBA 
believes that the proposed size standards for these industries are more 
reflective of the current economic characteristics of businesses in 
these industries and the latest trends in the economy. Thus, SBA is 
adopting its proposal to increase the size standards for NAICS 454210 
and 454390 from $12 million and $8 million to $18.5 million and $13 
million, respectively, and retain the size standards for NAICS 445120 
and 447110 at $32.0 million.

[[Page 35872]]

Comment on the 500-Employee Size Standard Applicable to 
Nonmanufacturers for Purposes of Federal Contracting

    In response to its proposal to retain the nonmanufacturer size 
standard at 500 employees, SBA received one comment to the May 2021 
proposed rule from the members of the U.S. House of Representatives 
Subcommittee on Contracting and Infrastructure requesting that SBA 
evaluate the current 500-employee size standard under its 
nonmanufacturer rule. Specifically, the comment expressed concern that 
because the level of revenue is immaterial to the determination of size 
under the 500-employee nonmanufacturer size standard, the current rule 
may allow a firm with billions of dollars in revenues to qualify as a 
small business. They suggested that SBA conduct an assessment of the 
nonmanufacturing industry based on revenue and/or other factors that 
may be more appropriate to determine what may be considered small for 
the size of a business qualifying as a nonmanufacturer. The comment 
also raised other issues outside the scope of the SBA's proposed rule, 
such as reporting on SBA's small business procurement scorecard and 
SBA's process for granting waivers to the nonmanufacturing rule. SBA 
responded to the comments on those issues in a separate letter and 
addresses the comment regarding the 500-employee nonmanufacturer size 
standard below.
SBA's Response
    While the nonmanufacturer rule applies to firms primarily engaged 
in business activities within Sectors 42 and 44-45, SBA did not review 
the 500-employee nonmanufacturer size standard in its May 2021 proposed 
rule. However, in an upcoming proposed rule covering the manufacturing 
sector and industries with employee-based size standards in other 
sectors (except Wholesale Trade or Retail Trade), SBA will examine 
whether the current 500-employee size standard for nonmanufacturers is 
appropriate and provide a detailed response to the Subcommittee's 
comment. That rulemaking will be identified under RIN 3245-AH09. 
Interested parties will have an opportunity to review the SBA's 
proposed rule and submit comments when the rule is published in the 
Federal Register. Thus, in this final rule, SBA is not evaluating the 
size standard for nonmanufacturers.

Comment Opposed to SBA's Proposed Changes

    SBA received one comment opposed to its proposed changes on the 
grounds that SBA's size standards are generally too large and allow 
larger corporations to obtain small business status and to dominate the 
market. The commenter also recommended that SBA abolish the Davis-Bacon 
Act and other regulations that may place burdens on small businesses. 
The commenter also urged SBA to broadly define small businesses as 
those with less than 100 employees.
SBA's Response
    SBA believes that establishing a common industry size standard of 
less than 100 employees for all wholesale and retail trade firms would 
be contrary to the Small Business Act. Under the Small Business Act 
(Act) (15 U.S.C. 632(a)), SBA's Administrator is responsible for 
establishing small business size definitions and ensuring that such 
definitions vary from industry to industry to reflect differences among 
various industries. The Jobs Act requires SBA to review every five 
years all size standards and make necessary adjustments to reflect 
current industry and Federal market conditions. The size standards 
adopted in this final rule are part of SBA's efforts to meet its 
statutory responsibility. Moreover, SBA conducted its review of size 
standards according to its Size Standards Methodology which was adopted 
through a notice and comment process. SBA considered all public 
comments in finalizing the revised Methodology, which included a 
detailed explanation of how these sectors would be analyzed.
    SBA also does not agree with the comment urging SBA to abolish the 
Davis-Bacon Act and other regulations that may place burdens on small 
businesses. The Davis-Bacon Act requires contractors and subcontractors 
to pay laborers and mechanics employed under the contract no less than 
the locally prevailing wages and fringe benefits for corresponding work 
on similar projects in the area (Pub. L. 107-217, Sec. 1, 6(b), Aug. 
21, 2002, 116 Stat. 1062, 1304). While the commenter did not specify 
which regulations would be included under the ``other'' category, SBA 
notes that it generally does not have the authority to repeal or 
override the regulations of other agencies or of Acts passed by 
Congress.
    For the reasons above, in this final rule, SBA is adopting the 
proposed size standards from the May 2021 proposed rule without change, 
except for eight industries in Sector 42 for which SBA is increasing 
size standards instead of maintaining them in the proposed rule.

Summary of Adopted Revisions to Size Standards

    Based on the evaluation of public comments it received on the May 
2021 proposed rule and on its analyses of industry factors using the 
latest available relevant industry and program data when the proposed 
rule was prepared, SBA is increasing 57 size standards, including 22 
employee-based size standards in NAICS Sector 42 and 35 receipts-based 
size standards in NAICS Sector 44-45. A summary of SBA's size standards 
revisions in this rule can be found below in Table 2, Summary of Size 
Standards Revisions (Employees) and Table 3, Summary of Size Standards 
Revisions (Receipts).

                                  Table 2--Summary of Size Standards Revisions
                                                   [Employees]
----------------------------------------------------------------------------------------------------------------
                                                                   Current size     Calculated     Adopted size
    NAICS code               NAICS U.S. industry title               standard      size standard     standard
                                                                    (employees)     (employees)     (employees)
----------------------------------------------------------------------------------------------------------------
423110...........  Automobile and Other Motor Vehicle Merchant               250             225             250
                    Wholesalers.
423120...........  Motor Vehicle Supplies and New Parts Merchant             200             150             200
                    Wholesalers.
423130...........  Tire and Tube Merchant Wholesalers...........             200             175             200
423140...........  Motor Vehicle Parts (Used) Merchant                       100             125             125
                    Wholesalers.
423210...........  Furniture Merchant Wholesalers...............             100              50             100
423220...........  Home Furnishing Merchant Wholesalers.........             100              75             100
423310...........  Lumber, Plywood, Millwork, and Wood Panel                 150              75             150
                    Merchant Wholesalers.
423320...........  Brick, Stone, and Related Construction                    150             100             150
                    Material Merchant Wholesalers.
423330...........  Roofing, Siding, and Insulation Material                  200             225             225
                    Merchant Wholesalers.
423390...........  Other Construction Material Merchant                      100              75             100
                    Wholesalers.
423410...........  Photographic Equipment and Supplies Merchant              200             150             200
                    Wholesalers.

[[Page 35873]]

 
423420...........  Office Equipment Merchant Wholesalers........             200             200             200
423430...........  Computer and Computer Peripheral Equipment                250             225             250
                    and Software Merchant Wholesalers.
423440...........  Other Commercial Equipment Merchant                       100              50             100
                    Wholesalers.
423450...........  Medical, Dental, and Hospital Equipment and               200             200             200
                    Supplies Merchant Wholesalers.
423460...........  Ophthalmic Goods Merchant Wholesalers........             150             175             175
423490...........  Other Professional Equipment and Supplies                 150             125             150
                    Merchant Wholesalers.
423510...........  Metal Service Centers and Other Metal                     200             150             200
                    Merchant Wholesalers.
423520...........  Coal and Other Mineral and Ore Merchant                   100             200             200
                    Wholesalers.
423610...........  Electrical Apparatus and Equipment, Wiring                200             125             200
                    Supplies, and Related Equipment Merchant
                    Wholesalers.
423620...........  Household Appliances, Electric Housewares,                200             225             225
                    and Consumer Electronics Merchant
                    Wholesalers.
423690...........  Other Electronic Parts and Equipment Merchant             250             225             250
                    Wholesalers.
423710...........  Hardware Merchant Wholesalers................             150              75             150
423720...........  Plumbing and Heating Equipment and Supplies               200             150             200
                    (Hydronics) Merchant Wholesalers.
423730...........  Warm Air Heating and Air-Conditioning                     150             175             175
                    Equipment and Supplies Merchant Wholesalers.
423740...........  Refrigeration Equipment and Supplies Merchant             100             100             125
                    Wholesalers.
423810...........  Construction and Mining (except Oil Well)                 250             200             250
                    Machinery and Equipment Merchant Wholesalers.
423820...........  Farm and Garden Machinery and Equipment                   100             100             125
                    Merchant Wholesalers.
423830...........  Industrial Machinery and Equipment Merchant               100              75             100
                    Wholesalers.
423840...........  Industrial Supplies Merchant Wholesalers.....             100             100             125
423850...........  Service Establishment Equipment and Supplies              100             100             125
                    Merchant Wholesalers.
423860...........  Transportation Equipment and Supplies (except             150             175             175
                    Motor Vehicle) Merchant Wholesalers.
423910...........  Sporting and Recreational Goods and Supplies              100              50             100
                    Merchant Wholesalers.
423920...........  Toy and Hobby Goods and Supplies Merchant                 150             175             175
                    Wholesalers.
423930...........  Recyclable Material Merchant Wholesalers.....             100             100             125
423940...........  Jewelry, Watch, Precious Stone, and Precious              100             100             125
                    Metal Merchant Wholesalers.
423990...........  Other Miscellaneous Durable Goods Merchant                100              50             100
                    Wholesalers.
424110...........  Printing and Writing Paper Merchant                       200             225             225
                    Wholesalers.
424120...........  Stationery and Office Supplies Merchant                   150             150             150
                    Wholesalers.
424130...........  Industrial and Personal Service Paper                     150             125             150
                    Merchant Wholesalers.
424210...........  Drugs and Druggists' Sundries Merchant                    250             250             250
                    Wholesalers.
424310...........  Piece Goods, Notions, and Other Dry Goods                 100              50             100
                    Merchant Wholesalers.
424320...........  Men's and Boys' Clothing and Furnishings                  150             125             150
                    Merchant Wholesalers.
424330...........  Women's, Children's, and Infants' Clothing                100              75             100
                    and Accessories Merchant Wholesalers.
424340...........  Footwear Merchant Wholesalers................             200             200             200
424410...........  General Line Grocery Merchant Wholesalers....             250             250             250
424420...........  Packaged Frozen Food Merchant Wholesalers....             200             150             200
424430...........  Dairy Product (except Dried or Canned)                    200             200             200
                    Merchant Wholesalers.
424440...........  Poultry and Poultry Product Merchant                      150             125             150
                    Wholesalers.
424450...........  Confectionery Merchant Wholesalers...........             200             225             225
424460...........  Fish and Seafood Merchant Wholesalers........             100              50             100
424470...........  Meat and Meat Product Merchant Wholesalers...             150             100             150
424480...........  Fresh Fruit and Vegetable Merchant                        100              75             100
                    Wholesalers.
424490...........  Other Grocery and Related Products Merchant               250             200             250
                    Wholesalers.
424510...........  Grain and Field Bean Merchant Wholesalers....             200             175             200
424520...........  Livestock Merchant Wholesalers...............             100             100             125
424590...........  Other Farm Product Raw Material Merchant                  100             175             175
                    Wholesalers.
424610...........  Plastics Materials and Basic Forms and Shapes             150             125             150
                    Merchant Wholesalers.
424690...........  Other Chemical and Allied Products Merchant               150             175             175
                    Wholesalers.
424710...........  Petroleum Bulk Stations and Terminals........             200             225             225
424720...........  Petroleum and Petroleum Products Merchant                 200             200             200
                    Wholesalers (except Bulk Stations and
                    Terminals).
424810...........  Beer and Ale Merchant Wholesalers............             200             125             200
424820...........  Wine and Distilled Alcoholic Beverage                     250             225             250
                    Merchant Wholesalers.
424910...........  Farm Supplies Merchant Wholesalers...........             200             175             200
424920...........  Book, Periodical, and Newspaper Merchant                  200             200             200
                    Wholesalers.
424930...........  Flower, Nursery Stock, and Florists' Supplies             100              50             100
                    Merchant Wholesalers.
424940...........  Tobacco and Tobacco Product Merchant                      250             250             250
                    Wholesalers.
424950...........  Paint, Varnish, and Supplies Merchant                     150             150             150
                    Wholesalers.
424990...........  Other Miscellaneous Nondurable Goods Merchant             100              50             100
                    Wholesalers.
425110...........  Business to Business Electronic Markets......             100             100             125
425120...........  Wholesale Trade Agents and Brokers...........             100             125             125

[[Page 35874]]

 
441110...........  New Car Dealers..............................             200             150             200
454310...........  Fuel Dealers.................................             100              75             100
----------------------------------------------------------------------------------------------------------------


                                  Table 3--Summary of Size Standards Revisions
                                                   [Receipts]
----------------------------------------------------------------------------------------------------------------
                                                                   Current size     Calculated     Adopted size
    NAICS code               NAICS U.S. industry title              standard ($    size standard    standard ($
                                                                     million)       ($ million)      million)
----------------------------------------------------------------------------------------------------------------
441120...........  Used Car Dealers.............................           $27.0           $17.0           $27.0
441210...........  Recreational Vehicle Dealers.................            35.0            19.0            35.0
441222...........  Boat Dealers.................................            35.0            11.5            35.0
441228...........  Motorcycle, ATV, and All Other Motor Vehicle             35.0            10.0            35.0
                    Dealers.
441310...........  Automotive Parts and Accessories Stores......            16.5            25.0            25.0
441320...........  Tire Dealers.................................            16.5            22.5            22.5
442110...........  Furniture Stores.............................            22.0            19.0            22.0
442210...........  Floor Covering Stores........................             8.0             7.5             8.0
442291...........  Window Treatment Stores......................             8.0            10.0            10.0
442299...........  All Other Home Furnishings Stores............            22.0            29.5            29.5
443141...........  Household Appliance Stores...................            12.0            19.5            19.5
443142...........  Electronics Stores...........................            35.0            31.5            35.0
444110...........  Home Centers.................................            41.5            41.5            41.5
444120...........  Paint and Wallpaper Stores...................            30.0            21.0            30.0
444130...........  Hardware Stores..............................             8.0            14.5            14.5
444190...........  Other Building Material Dealers..............            22.0            14.0            22.0
444210...........  Outdoor Power Equipment Stores...............             8.0             8.5             8.5
444220...........  Nursery, Garden Center, and Farm Supply                  12.0            19.0            19.0
                    Stores.
445110...........  Supermarkets and Other Grocery (except                   35.0            32.0            35.0
                    Convenience) Stores.
445120...........  Convenience Stores...........................            32.0             8.5            32.0
445210...........  Meat Markets.................................             8.0             7.0             8.0
445220...........  Fish and Seafood Markets.....................             8.0             7.0             8.0
445230...........  Fruit and Vegetable Markets..................             8.0             7.5             8.0
445291...........  Baked Goods Stores...........................             8.0            14.0            14.0
445292...........  Confectionery and Nut Stores.................             8.0            17.0            17.0
445299...........  All Other Specialty Food Stores..............             8.0             9.0             9.0
445310...........  Beer, Wine, and Liquor Stores................             8.0             9.0             9.0
446110...........  Pharmacies and Drug Stores...................            30.0            33.0            33.0
446120...........  Cosmetics, Beauty Supplies, and Perfume                  30.0            28.0            30.0
                    Stores.
446130...........  Optical Goods Stores.........................            22.0            26.0            26.0
446191...........  Food (Health) Supplement Stores..............            16.5            20.0            20.0
446199...........  All Other Health and Personal Care Stores....             8.0             8.5             8.5
447110...........  Gasoline Stations with Convenience Stores....            32.0            21.0            32.0
447190...........  Other Gasoline Stations......................            16.5            29.5            29.5
448110...........  Men's Clothing Stores........................            12.0            22.5            22.5
448120...........  Women's Clothing Stores......................            30.0            25.0            30.0
448130...........  Children's and Infants' Clothing Stores......            35.0            32.5            35.0
448140...........  Family Clothing Stores.......................            41.5            39.5            41.5
448150...........  Clothing Accessories Stores..................            16.5            29.5            29.5
448190...........  Other Clothing Stores........................            22.0            27.5            27.5
448210...........  Shoe Stores..................................            30.0            29.0            30.0
448310...........  Jewelry Stores...............................            16.5            18.0            18.0
448320...........  Luggage and Leather Goods Stores.............            30.0            33.5            33.5
451110...........  Sporting Goods Stores........................            16.5            23.5            23.5
451120...........  Hobby, Toy, and Game Stores..................            30.0            31.0            31.0
451130...........  Sewing, Needlework, and Piece Goods Stores...            30.0            19.5            30.0
451140...........  Musical Instrument and Supplies Stores.......            12.0            20.0            20.0
451211...........  Book Stores..................................            30.0            31.5            31.5
451212...........  News Dealers and Newsstands..................             8.0            20.0            20.0
452210...........  Department Stores............................            35.0            32.5            35.0
452311...........  Warehouse Clubs and Supercenters.............            32.0            41.5            41.5
452319...........  All Other General Merchandise Stores.........            35.0            35.0            35.0
453110...........  Florists.....................................             8.0             6.5             8.0
453210...........  Office Supplies and Stationery Stores........            35.0            32.0            35.0
453220...........  Gift, Novelty, and Souvenir Stores...........             8.0            12.0            12.0
453310...........  Used Merchandise Stores......................             8.0            12.5            12.5
453910...........  Pet and Pet Supplies Stores..................            22.0            28.0            28.0
453920...........  Art Dealers..................................             8.0            14.5            14.5

[[Page 35875]]

 
453930...........  Manufactured (Mobile) Home Dealers...........            16.5            16.5            16.5
453991...........  Tobacco Stores...............................             8.0             7.5             8.0
453998...........  All Other Miscellaneous Store Retailers                   8.0            10.0            10.0
                    (except Tobacco Stores).
454110...........  Electronic Shopping and Mail-Order Houses....            41.5            33.0            41.5
454210...........  Vending Machine Operators....................            12.0            18.5            18.5
454390...........  Other Direct Selling Establishments..........             8.0            13.0            13.0
----------------------------------------------------------------------------------------------------------------

    Table 4, Summary of Adopted Size Standards Revisions by Sector, 
summarizes the adopted changes to size standards by NAICS sector.

                                             Table 4--Summary of Adopted Size Standards Revisions by Sector
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Number of size   Number of size   Number of Size   Number of size
                     Sector                                   Sector name                standards        standards        standards        standards
                                                                                          reviewed        increased        decreased        maintained
--------------------------------------------------------------------------------------------------------------------------------------------------------
42..............................................  Wholesale Trade...................               71               22                0               49
44-45...........................................  Retail Trade......................               66               35                0               31
                                                                                     -------------------------------------------------------------------
    Total.......................................  ..................................              137               57                0               80
--------------------------------------------------------------------------------------------------------------------------------------------------------

Evaluation of Dominance in Field of Operation

    SBA determined that for the industries evaluated under this final 
rule, no individual firm at or below the adopted size standards would 
be large enough to dominate its field of operation. At the size 
standard levels adopted in this final rule, the small business share of 
total industry receipts among those industries would be, on average, 
0.4%, varying from 0.005% to 4.8%. These market shares effectively 
preclude a firm at or below the adopted size standards from exerting 
control on any of the industries.

Alternatives Considered

    In response to the unprecedented economic impacts of the ongoing 
COVID-19 pandemic on small businesses and Federal Government response, 
SBA is adopting increases to size standards where the data suggests 
increases are warranted, and retaining all current size standards where 
the data suggested lowering of size standards is appropriate. SBA is 
also retaining all current size standards where the data suggested no 
changes to the current size standards.
    Nonetheless, SBA considered two other alternatives. Alternative 
Option One was to adopt changes to size standards exactly as suggested 
by the analytical results. In other words, Alternative Option One would 
entail increasing size standards for 57 industries, decreasing them for 
66 industries, and retaining them at their current levels for 14 
industries. Alternative Option Two was to retain all current size 
standards, including those for which the analytical results support 
increases.
    SBA did not adopt Alternative Option One because it would cause a 
substantial number of currently small businesses to lose their small 
business status and hence to lose their access to Federal small 
business assistance, especially SBA's financial assistance. Lowering 
size standards in the current environment would also run counter to 
various measures the Federal Government has implemented to help small 
businesses and the overall economy recover from the ongoing COVID-19 
pandemic. Considering the impacts of the Great Recession and Federal 
Government actions that followed to support small businesses and the 
overall economy, SBA also adopted a policy of not decreasing size 
standards during the first five-year review of size standards, even 
though the data supported decreases.
    Under Alternative Option Two, given the current COVID-19 pandemic, 
SBA considered retaining the current level of all size standards even 
though the analytical results suggested changing them. Under this 
option, as the current situation develops, SBA will be able to assess 
new data available on economic indicators and SBA loans before adopting 
changes to size standards. However, SBA is not adopting Alternative 
Option Two because the results discussed in the Regulatory Impact 
Analysis section, below, show that retaining all size standards at 
their current levels would cause otherwise qualified small businesses 
to forgo various small business benefits becoming available to them 
under the option of increasing 57 and retaining 80 size standards. Such 
benefits would include access to capital through SBA's business loan, 
EIDL loan, and SBIC programs, and exemptions from paperwork and other 
compliance requirements.

Compliance With Executive Order 12866, the Congressional Review Act (5 
U.S.C. 801-808), the Regulatory Flexibility Act (5 U.S.C. 601-612), 
Executive Orders 13563, 12988, and 13132, and the Paperwork Reduction 
Act (44 U.S.C. Ch. 35)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
final rule is a significant regulatory action for purposes of Executive 
Order 12866. Accordingly, in the next section SBA provides a Regulatory 
Impact Analysis of this final rule, including: (1) A statement of the 
need for the regulatory action, (2) An examination of alternative 
approaches, and (3) An evaluation of the benefits and costs--both 
quantitative and qualitative--of the regulatory action and the 
alternatives considered.

[[Page 35876]]

Regulatory Impact Analysis

1. What is the need for this regulatory action?
    SBA's mission is to aid and assist small businesses through a 
variety of financial, procurement, business development and counseling, 
and disaster assistance programs. To determine the actual intended 
beneficiaries of these programs, SBA establishes numerical size 
standards by industry to identify businesses that are deemed small.
    Under the Small Business Act (Act) (15 U.S.C. 632(a)), SBA's 
Administrator is responsible for establishing small business size 
definitions (or ``size standards'') and ensuring that such definitions 
vary from industry to industry to reflect differences among various 
industries. The Jobs Act requires SBA to review every five years all 
size standards and make necessary adjustments to reflect current 
industry and Federal market conditions. This final rule is part of the 
second five-year review of size standards in accordance with the Jobs 
Act. The first five-year review of size standards was completed in 
early 2016. Such periodic reviews of size standards provide SBA with an 
opportunity to incorporate ongoing changes to industry structure and 
Federal market environment into size standards and to evaluate the 
impacts of prior revisions to size standards on small businesses. This 
also provides SBA with an opportunity to seek and incorporate public 
input to the size standards review and analysis. SBA believes that the 
size standards revisions adopted for industries being reviewed in this 
final rule will make size standards more reflective of the current 
economic characteristics of businesses in those industries and the 
latest trends in the Federal marketplace.
    The revisions to the existing size standards for 57 industries in 
NAICS Sectors 42 and 44-45 are consistent with SBA's statutory mandate 
to help small businesses grow and create jobs and to review and adjust 
size standards every five years. This regulatory action promotes the 
Administration's goals and objectives and ensures that SBA complies 
with statutory requirements. One of SBA's goals in support of promoting 
the Administration's objectives is to help small businesses succeed 
through fair and equitable access to capital and credit, Federal 
Government contracts and purchases, and management and technical 
assistance. Reviewing and modifying size standards, when appropriate, 
ensures that intended beneficiaries can access Federal small business 
programs that are designed to assist them to become competitive and 
create jobs.
2. What are the potential benefits and costs of this regulatory action?
    OMB directs agencies to establish an appropriate baseline to 
evaluate any benefits, costs, or transfer impacts of regulatory actions 
and alternative approaches considered. The baseline should represent 
the agency's best assessment of what the world would look like absent 
the regulatory action. For a new regulatory action promulgating 
modifications to an existing regulation (such as modifying the existing 
size standards), a baseline assuming no change to the regulation (i.e., 
making no changes to current size standards) generally provides an 
appropriate benchmark for evaluating benefits, costs, or transfer 
impacts of regulatory changes and their alternatives.

Changes to Size Standards

    Based on the results from the analyses of the latest industry data, 
evaluation of the public comments on the proposed rule, as well as 
consideration of the impact of size standards changes on small 
businesses and significant adverse impacts of the COVID-19 pandemic on 
small firms and the overall economy, of the total of 137 industries in 
Sectors 42 and 44-45 evaluated in the proposed rule, SBA is adopting 
increases to size standards for 57 industries and maintaining current 
size standards for the remaining 80 industries.

The Baseline

    For purposes of this regulatory action, the baseline represents 
maintaining the ``status quo,'' i.e., making no changes to the current 
size standards. Using the number of small businesses and levels of 
small business benefits (such as SBA's business loans, disaster 
assistance, etc.) they receive under the current size standards as a 
baseline, one can examine the potential benefits, costs, and transfer 
impacts of changes to size standards on small businesses and on the 
overall economy.
    Based on the 2012 Economic Census (the latest available when this 
proposed rule was prepared), of a total of about 975,569 businesses in 
industries in Sectors 42 and 44-45, 97.4% are considered small under 
the current size standards. That percentage varies from 96.6% in Sector 
42 to 97.9% in Sector 44-45.
    Based on SBA's internal data on its loan programs for fiscal years 
2018-2020, small businesses in those industries received, on an annual 
basis, a total of 9,871 7(a) and CDC/504 loans in that period, totaling 
about $5.4 billion, of which 82.6% was issued through the 7(a) program 
and 17.4% was issued through the CDC/504 program. During fiscal years 
2018-2020, small businesses in those industries also received 561 loans 
through SBA's Economic Injury Disaster Loan (EIDL) program, totaling 
about $28.3 million on an annual basis.\2\ Table 5, Baseline for All 
Industries, provides these baseline results by sector.
---------------------------------------------------------------------------

    \2\ The analysis of the disaster loan data excludes physical 
disaster loans that are available to anyone regardless of size, 
disaster loans issued to nonprofit entities, and EIDLs issued under 
the COVID-19 relief program. Effective January 1, 2022, SBA stopped 
accepting applications for new COVID EIDL loans or advances. Thus, 
the disaster loan analysis presented here pertains to the regular 
EIDL loans only.
    SBA estimates impacts of size standards changes on EIDL loans by 
calculating the ratio of businesses getting EIDL loans to total 
small businesses (based on the Economic Census data) and multiplying 
it by the number of impacted small firms. Due to data limitations, 
for FY 2019-20, some loans with both physical and EIDL loan 
components could not be broken into the physical and EIDL loan 
amounts. In such cases, SBA applied the ratio of EIDL amount to 
total (physical loan + EIDL) amount using FY 2016-18 data to the FY 
2019-20 data to obtain the amount attributable to the EIDL loans.
---------------------------------------------------------------------------

    The results of regulatory impact analyses SBA provided in the May 
2021 proposed rule were based on SBA loan data for fiscal years (FYs) 
2016-2018. In this final rule, SBA is updating the impact analysis 
results by using SBA loan data for fiscal years 2018-2020. Accordingly, 
there can be some differences between the proposed rule and this final 
rule with respect to impacts of size standards changes on SBA loans.

                                      Table 5--Baseline for All Industries
----------------------------------------------------------------------------------------------------------------
                                                                     Sector 42     Sector 44-45        Total
----------------------------------------------------------------------------------------------------------------
Baseline all industries (current size standards)................              71              66             137
Total firms (2012 Economic Census)..............................         319,716         655,853         975,569
Total small firms under current size standards (2012 Economic            308,710         641,995         950,705
 Census)........................................................

[[Page 35877]]

 
Small firms as % of total firms.................................           96.6%           97.9%           97.5%
No. of 7(a) and CDC/504 loans (FY 2018-2020)....................           2,665           7,206           9,871
Amount of 7(a) and CDC/504 loans ($ million) (FY 2018-2020).....          $1,706          $3,732          $5,438
No. of EIDL loans (FY 2018-2020) *..............................             123             438             561
Amount of EIDL loans ($million) (FY 2018-2020) *................            $7.4           $20.9           $28.3
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.

Increases to Size Standards

    As stated above, of the 73-employee-based and 64 receipts-based 
size standards reviewed in NAICS Sectors 42 and 44-45, based on the 
results from analyses of latest industry data, impacts of size 
standards changes on small businesses, considerations of the impacts of 
the COVID-19 pandemic, and public comments to the proposed rule, SBA is 
adopting increases to size standards for 57 industries and maintaining 
size standards for the remaining 80 industries. Below are descriptions 
of the benefits, costs, and transfer impacts of the increases to size 
standards adopted in this final rule.

Benefits of Increasing Size Standards

    The most significant benefit to businesses from increases to size 
standards is gaining eligibility for Federal small business assistance 
programs or retaining that eligibility for such programs for a longer 
period. These include SBA's business loan programs, such as the 7(a) 
and CDC/504 programs, and the EIDL loan program. SBA's regulations 
provide that NAICS codes for the Wholesale and Retail Trade industries 
shall not be used to classify Federal Government acquisition for 
supplies (13 CFR 121.402(b)). As such, for purposes of Federal 
contracts set aside for small businesses, the size standard for all 
industries in the Wholesale Trade and Retail Trade sectors is 500 
employees under the SBA's nonmanufacturer rule (see 13 CFR 121.406(b)). 
SBA is not evaluating the 500-employee the nonmanufacturer size 
standard in this final rule. Thus, the increases to size standards in 
this final rule will not impact the Federal market for contracts set 
aside for small businesses.
    Besides the access to SBA's financial assistance programs discussed 
above, because of increases to size standards, small businesses also 
benefit through reduced fees, less paperwork, and fewer compliance 
requirements that are available to small businesses through the Federal 
Government programs. However, SBA has no data to estimate the number of 
small businesses receiving such benefits.
    Based on the 2012 Economic Census (the latest available when the 
proposed rule was prepared), SBA estimates that in 57 industries in 
NAICS Sectors 42 and 44-45 for which this final rule is increasing size 
standards, about 2,000 firms not small under the current size standards 
will become small under the adopted size standards increases and 
therefore become eligible for SBA's financial and other Federal non-
procurement programs. That represents about 0.5% of all firms 
classified as small under the current size standards in industries for 
which SBA is adopting increases to size standards. Table 6, Impacts of 
Increasing Size Standards, provides impacts of increasing 57 and 
maintaining 80 size standards by NAICS sector.

                                  Table 6--Impacts of Increasing Size Standards
----------------------------------------------------------------------------------------------------------------
                                                                     Sector 42     Sector 44-45        Total
----------------------------------------------------------------------------------------------------------------
No. of industries with increases to size standards..............              22              35              57
Total current small businesses in industries with increases to            93,426         286,758         380,184
 size standards (2012 Economic Census)..........................
Additional firms qualifying as small under standards (2012                   308           1,694           2,002
 Economic Census)...............................................
% of additional firms qualifying as small relative to current               0.3%            0.6%            0.5%
 small businesses in industries with increases to size standards
Total no. of 7(a) and 504 loans to small business in industries              536           3,692           4,228
 with increases to size standards (FY 2018-2020)................
Total 7(a) and 504 loan amounts to small businesses in                      $341          $1,641          $1,982
 industries with increases to size standards ($ million) (FY
 2018-2020).....................................................
Estimated no. of 7(a) and 504 loans to newly-qualified small                   2              23              25
 firms..........................................................
Estimated 7(a) and 504 loan amounts to newly-qualified small                $1.3           $10.3           $11.6
 firms ($ million)..............................................
% increase to 7(a) and 504 loan amount relative to the total                0.4%            0.6%            0.6%
 amount of 7(a) and 504 loans in industries with increases to
 size standards.................................................
Total no. of EIDL loans to small businesses in industries with                26             248             274
 increases to size standards (FY 2018-2020) *...................
Total amount of EIDL loans to small businesses in industries                $1.5           $11.7           $13.3
 with increases to size standards ($ million) (FY 2018-2020) *..
Estimated no. of EIDL loans to newly-qualified small firms *....               1               2               3
Estimated EIDL loan amount to newly-qualified small firms ($               $0.06           $0.09            $0.2
 million) *.....................................................
% increase to EIDL loan amount relative to the total amount of              3.8%            0.8%            1.5%
 disaster loans in industries with increases to size standards *
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.


[[Page 35878]]

    Growing small businesses that are close to exceeding the current 
size standards will be able to retain their small business status for a 
longer period under the higher size standards, thereby enabling them to 
continue to benefit from the Federal small business assistance outside 
of the contracting programs.
    Based on its internal loan data for fiscal years 2018-2020, SBA 
estimates that up to about 25 SBA 7(a) and CDC/504 loans totaling about 
$11.6 million could be made to these newly-qualified small businesses 
in those industries under the adopted increases to size standards. That 
represents a 0.4% increase to the 7(a) and CDC/504 loan amount compared 
to the baseline (see Table 6).
    Newly-qualified small businesses will also benefit from the SBA's 
EIDL program. Since the benefits provided through this program are 
contingent on the occurrence and severity of a disaster in the future, 
SBA cannot make a meaningful estimate of this impact. However, based on 
the historical trends of the disaster loan program data, SBA estimates 
that, on an annual basis, the newly-defined small businesses under the 
increases to 57 size standards could receive three disaster loans 
(except physical disaster loans, which are unaffected by the changes in 
this rule), totaling about $0.2 million (see Table 6).
    Additionally, the newly-defined small businesses would also benefit 
through reduced fees, less paperwork, and fewer compliance requirements 
that are available to small businesses through the Federal Government, 
but SBA has no data to quantify this impact.

Costs of Increasing Size Standards

    To the extent that newly-qualified small businesses could seek 
assistance from SBA's financial assistance programs, the adopted 
increases to size standards may entail some additional administrative 
costs to the Government for the verification of their small business 
status. However, small business lenders have an option of using the 
tangible net worth and net income-based alternative size standard 
instead of using the industry-based size standards to establish 
eligibility for SBA's loans which many small businesses already qualify 
under. Moreover, this rule does not establish new size standards for 
the very first time; rather it intends to modify the existing size 
standards in accordance with a statutory requirement and the latest 
data and other relevant factors. For these reasons, SBA believes that 
these added administrative costs will be minor because necessary 
mechanisms are already in place to handle the additional requirements.

Transfer Impacts of Increasing Size Standards

    The increases to size standards adopted in this final rule may 
result in some redistribution of SBA loans between the newly-qualified 
small businesses and small businesses under the current size standards. 
However, SBA estimates this impact to be de minimis because the vast 
majority of the SBA loans go to small businesses that are much smaller 
than the current or adopted size standards. Moreover, this rule would 
not have any impact on Federal contract dollars awarded to small 
businesses since SBA's regulations specify that NAICS codes for the 
Wholesale and Retail Trade industries shall not be used to classify 
Government procurement for supplies.
3. What alternatives have been considered?
    Under OMB Circular A-4, SBA is required to consider regulatory 
alternatives to the adopted changes in this final rule. In this 
section, SBA describes and analyzes two such alternatives. Alternative 
Option One to the final rule, a more stringent alternative to the 
adopted change, would propose adopting size standards based solely on 
the analytical results. In other words, the size standards of 57 
industries for which the analytical results suggest raising them would 
be raised. However, the size standards of 66 industries for which the 
analytical results suggest lowering them, as shown in Table 4 of the 
May 2021 proposed rule, would be lowered. For the 14 remaining 
industries for which analysis suggested no changes, size standards 
would be maintained at their current levels. Alternative Option Two 
would propose retaining size standards for all industries, given the 
uncertainty generated by the ongoing COVID-19 pandemic. Below, SBA 
discusses benefits, costs, and the net impacts of each option.

Alternative Option One: Adopting All Calculated Size Standards

    As discussed previously in the Alternatives Considered section of 
this final rule, Alternative Option One would cause a substantial 
number of currently small businesses to lose their small business 
status and hence to lose their access to Federal small business 
assistance, especially SBA's financial assistance. These consequences 
could be mitigated. For example, in response to the 2008 Financial 
Crisis and the economic conditions that followed, SBA adopted a general 
policy in the first five-year comprehensive size standards review to 
not lower any size standard (except to exclude dominant firms) even 
when the analytical results suggested the size standard should be 
lowered. Currently, because of the economic challenges presented by the 
COVID-19 pandemic and the measures taken to protect public health, SBA 
has decided to adopt the same general policy of not lowering size 
standards in the ongoing second five-year comprehensive size standards 
review as well.
    The primary benefits of adopting Alternative Option One would 
include: (1) SBA's management, technical, and financial assistance 
would be targeted to the most appropriate beneficiaries of such 
programs according to the analytical results; (2) Adopting the size 
standards based on the analytical results would also promote 
consistency and predictability in SBA's implementation of its authority 
to set or adjust size standards; and (3) Firms who would remain small 
would face less competition from larger small firms for the remaining 
Federal opportunities. Specifically, SBA sought public comment on the 
impact of adopting the size standards based on the analytical results.
    As explained in the ``Size Standards Methodology'' white paper, in 
addition to adopting all results of the analysis of the primary 
factors, SBA evaluates other relevant factors as needed, such as the 
impact of the reductions or increases of size standards on the 
distribution of SBA resources intended for small businesses and may 
adopt different results with the intention of mitigating potential 
negative impacts.
    We have already discussed the benefits, costs, and transfer impacts 
of increasing 57 and retaining 80 size standards. Below we discuss the 
benefits, costs, and transfer impacts of decreasing 66, increasing 57, 
and maintaining 14 size standards based on the analytical results.

Benefits of Decreasing Size Standards Under Alternative Option One

    The most significant benefit to businesses from decreases to size 
standards when SBA's analysis suggests such decreases is to ensure that 
size standards are more reflective of latest industry structure and 
current market trends and that Federal small business assistance is 
more effectively targeted to its intended beneficiaries. These include 
SBA's business loan and EIDL programs.
    Decreasing size standards may reduce the administrative costs to 
the Federal Government, because the risk of providing SBA's loans to 
firms that do

[[Page 35879]]

not need them the most may diminish when the size standards reflect 
better the structure of the market. This may provide a better chance 
for smaller small firms to grow and benefit from the opportunities and 
resources available through SBA.

Costs of Decreasing Size Standards Under Alternative Option One

    Table 7, Impacts of Decreasing Size Standards Under Alternative 
Option One, below, shows the various impacts of lowering size standards 
in 66 industries based solely on the analytical results. Based on the 
2012 Economic Census, more than 5,500 (1.0%) firms would lose their 
small business status under Alternative Option One.
    As shown in Table 7, decreasing size standards would have a 
relatively minor impact on small businesses applying for SBA's 7(a) and 
CDC/504 loans because a vast majority of such loans are issued to 
businesses that are far below the reduced size standards. For example, 
based on the loan data for fiscal years 2018-2020, SBA estimates that 
67 of SBA's 7(a) and CDC/504 loans, totaling $32.5 million, could not 
be made to those small businesses that would lose eligibility under the 
reduced size standards. That represents a 1.1% decrease of the loan 
amounts compared to the baseline. However, the actual impact could be 
much less as businesses losing small business eligibility under the 
decreases to industry-based size standards could still qualify for 
SBA's 7(a) and CDC/504 loans under the tangible net worth and net 
income-based alternative size standard.

                   Table 7--Impacts of Decreasing Size Standards Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
                                                                     Sector 42     Sector 44-45        Total
----------------------------------------------------------------------------------------------------------------
No. of industries for which SBA considered decreasing size                    38              28              66
 standards (2012 Economic Census)...............................
Total current small businesses in industries for which SBA               184,837         343,639         528,476
 considered decreasing size standards (2012 Economic Census)....
Estimated no. of firms losing small status for which SBA                   2,735           2,774           5,509
 considered decreasing size standards (2012 Economic Census)....
% of Firms losing small status relative to current small                    1.5%            0.8%            1.0%
 businesses in industries for which SBA considered decreasing
 size standards.................................................
Total no. of 7(a) and 504 loans to small businesses in                     1,829           3,464           5,293
 industries for which SBA considered decreasing size standards
 (FY 2018-2020).................................................
Total amount of 7(a) and 504 loans to small businesses in                 $1,176          $1,856          $3,032
 industries for which SBA considered decreasing size standards
 ($ million) (FY 2018-2020).....................................
Estimated no. of 7(a) and 504 loans not available to firms that               28              23              51
 would have lost small business status..........................
Estimated 7(a) and 504 loan amounts not available to firms that            $18.0           $14.5           $32.5
 would have small status ($ million)............................
% decrease to 7(a)and 504 loan amounts relative to the total                1.5%            0.8%            1.1%
 amount of 7(a) and 504 loans in industries for which SBA
 considered decreasing size standards...........................
Total no. of EIDL loans to small businesses in industries for                 79             187             266
 which SBA considered decreasing size standards (FY 2018-2020) *
Total amount of EIDL loans to small businesses in industries for            $4.8            $9.0           $13.8
 which SBA considered decreasing size standards ($ million) (FY
 2018-2020) *...................................................
Estimated no. of EIDL loans not available to firms that would                  2               3               5
 have lost small business status *..............................
Estimated EIDL loan amount not available to firms that would                $0.1            $0.1            $0.2
 have lost small business status ($ million) *..................
% decrease to EIDL loan amount relative to the baseline *.......            2.5%            1.5%            1.8%
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.

    Businesses losing small business status would also be impacted in 
terms of access to loans through the SBA's EIDL program. However, SBA 
expects such impact to be minimal as only a small number of businesses 
in those industries received such loans during fiscal years 2018-2020. 
Additionally, most of those businesses were below the reduced size 
standards. Since this program is contingent on the occurrence and 
severity of a disaster in the future, SBA cannot make a precise 
estimate of this impact. However, based on the disaster loan data for 
fiscal years 2018-2020, SBA estimates that, under Alternative Option 
One, on an annual basis, five EIDL loans, totaling about $0.2 million, 
would be unavailable to firms that no longer qualify as small under the 
decreases to size standards. Table 7 shows these results by sector.
    Small businesses becoming other than small if size standards were 
decreased might lose the benefits of reduced fees, and paperwork and 
compliance requirements that are available to small businesses through 
the Federal Government programs, but SBA has no data to quantify this 
impact. However, if agencies determine that SBA's size standards do not 
adequately serve the needs of their programs, they can establish a 
different size standard, with an approval from SBA, if they are 
required to use SBA's size standards for such programs.
    SBA may adopt mitigating measures to reduce the negative impact 
under the Alternative Option One. SBA could adopt one or more of the 
following three actions: (1) Accept decreases in size standards as 
suggested by the analytical results; (2) Decrease size standards by a 
smaller amount than the calculated values; and (3) Retain the size 
standards at their current levels. For example, in response to the 2008 
Financial Crisis, SBA adopted a general policy in the first five-year 
comprehensive size standards review to not lower any size standard 
(except to exclude dominant firms) even when the analytical results 
suggested the size standard should be lowered. Currently, because of 
the economic challenges presented by the COVID-19 pandemic and the 
measures taken to protect public health, in this final rule, SBA has 
decided to adopt the same general policy of not lowering size standards 
in the ongoing second five-

[[Page 35880]]

year comprehensive size standards review as well.
    Nevertheless, the impact on the overall loan activity is likely to 
be de minimis because SBA estimates that the majority of firms 
currently eligible for its loan programs would continue to remain 
eligible under the reduced size standards. SBA's regulations specify 
that NAICS codes for the Wholesale Trade and Retail Trade industries 
shall not be used to classify Federal Government acquisition for 
supplies (13 CFR 121.402(b)). As such, for purposes of Federal 
contracting, the size standard for all industries in the Wholesale 
Trade and Retail Trade sectors is 500 employees under SBA's 
nonmanufacturer rule (13 CFR 121.406(b)). Thus, SBA estimates that any 
decreases to size standards as part of this rulemaking will not impact 
the market for Federal contracts.

Transfer Impacts of Decreasing Size Standards Under Alternative Option 
One

    If the size standards were decreased under Alternative Option One, 
it may result in a redistribution of loans between the newly-qualified 
small businesses and small businesses under the current size standards. 
However, SBA estimates this impact to be de minimis as participants in 
SBA's financial assistance programs are on average much smaller than 
their industry size standards and SBA's loans are not disbursed based 
on a competitive process. Moreover, this rule would not have an impact 
on Federal contract dollars awarded to small businesses since SBA's 
regulations specify that NAICS codes for the Wholesale and Retail Trade 
industries shall not be used to classify Government acquisition for 
supplies. While SBA cannot estimate with certainty the actual outcome 
of the gains and losses among different groups of businesses from this 
redistribution, it can identify several probable impacts. With a 
smaller pool of small businesses under the decreases to size standards, 
some SBA's resources to be otherwise awarded to small businesses may be 
diverted to other uses or programs. However, since the total benefit 
provided through this program is contingent on the availability of 
funds and the occurrence and severity of a disaster in the future, SBA 
cannot make a meaningful estimate of this impact.

Net Impact of Alternative Option One

    To estimate the net impacts of adopting Alternative Option One, SBA 
followed the same methodology used to evaluate the impacts of the 
increasing size standards (see Table 6). However, under Alternative 
Option One, SBA used the calculated size standards instead of the 
adopted increases to determine the impacts of changes to current 
thresholds. The impacts of the increases of size standards were already 
shown in Table 6. Similarly, the impacts of the decreases of size 
standards were also already presented in Table 7. Table 8, Net Impacts 
of Size Standards Changes under Alternative Option One, presents the 
net impacts of adopting the calculated size standards under Alternative 
Option One.

                   Table 8--Net Impacts of Size Standards Changes Under Alternative Option One
----------------------------------------------------------------------------------------------------------------
                                                                     Sector 42     Sector 44-45        Total
----------------------------------------------------------------------------------------------------------------
No. of industries with changes to size standards................              60              63             123
Total no. of small business under the current size standards             278,263         630,397         908,660
 (2012 Economic Census).........................................
Additional firms qualifying as small under size standards (2012           -2,427          -1,080          -3,507
 Economic Census)...............................................
% of additional firms qualifying as small relative to total                -0.9%           -0.2%           -0.4%
 current small businesses.......................................
Total no. of 7(a) and 504 loans to small businesses (FY 2018-              2,665           7,206           9,871
 2020)..........................................................
Total amount of 7(a) and 504 loans to small businesses (FY 2018-          $1,706          $3,732          $5,438
 2020)..........................................................
Estimated no. of additional 7(a) and 504 loans to newly-                     -26               0             -26
 qualified small firms..........................................
Estimated additional 7(a) and 504 loan amount to newly-                   -$16.7           -$4.2          -$20.9
 qualified small firms ($ million)..............................
% increase to 7(a)and 504 loan amount relative to the total                -1.0%           -0.1%           -0.4%
 amount of 7(a) and 504 loans to small businesses...............
Total no. of EIDL loans to small businesses (FY 2018-2020) *....             123             438             561
Total amount of EIDL loans to small businesses (FY 2018-2020) *.            $7.4           $20.9           $28.3
Estimated no. of additional EIDL loans to newly-qualified small               -1              -1              -2
 firms *........................................................
Estimated additional EIDL loan amount to newly-qualified small            -$0.04          -$0.01          -$0.01
 firms ($ million) *............................................
% increase to EIDL loan amount relative to the total amount of             -0.5%            0.0%           0.01%
 EIDL loans to small businesses *...............................
----------------------------------------------------------------------------------------------------------------
* Excludes COVID-19 related EIDL loans due to their temporary nature. Effective January 1, 2022, SBA stopped
  accepting applications for new COVID EIDL loans or advances.

    As shown in Table 8, based on the 2012 Economic Census, SBA 
estimates that in 123 industries in NAICS Sectors 42 and 44-45 for 
which the analytical results suggested to change size standards, about 
3,500 firms would lose their small business size status under 
Alternative Option One. That represents about 0.4% of all firms 
classified as small under the current size standards in those 
industries.
    Based on SBA's loan data for fiscal years 2018-2020, the total 
number of 7(a) and CDC/504 loans will decrease by 26 loans, while the 
total loan amount will decrease by about $21 million. This is a 0.4% 
decrease of the 7(a) and CDC/504 loan amounts relative to the baseline.
    Firms' participation under SBA's EIDL loan program will be affected 
as well. Since the benefit provided through this program is contingent 
on the occurrence and severity of a disaster in the future, SBA cannot 
make a precise estimate of this impact. However, based on the EIDL loan 
program data for fiscal years 2018-2020, SBA estimates that the number 
of EIDL loans will decrease by two loans, while the total loan amount 
will decrease by about $0.01 million. This is a 0.01% decrease of the 
EIDL loan amounts relative to the baseline. Table 8 provides these 
results by NAICS sector.

Alternative Option Two: Retaining All Current Size Standards

    Under this option, given the current COVID-19 pandemic, as 
discussed elsewhere, SBA considered retaining the current levels of all 
size standards even though the analytical results suggested changing 
them. Under this option, as the current situation develops, SBA will be 
able to assess new data available on economic indicators and SBA loans 
as well. When compared to the baseline, there is a net impact of zero 
(i.e., zero

[[Page 35881]]

benefit and zero cost) for retaining all size standards. However, this 
option would cause otherwise qualified small businesses to forgo 
various small business benefits (e.g., access to capital and other 
benefits) that become available to them under the option of increasing 
57 and retaining 80 size standards adopted in this final rule. 
Moreover, retaining all size standards under this option would also be 
contrary to the SBA's statutory mandate to review and adjust, every 
five years, all size standards to reflect current industry and market 
conditions. Retaining all size standards without required periodic 
adjustments would increasingly exclude otherwise eligible small firms 
from small business benefits.

Congressional Review Act

    Subtitle E of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (codified at 5 U.S.C. 801-808), also known as the 
Congressional Review Act or CRA, generally provides that before a rule 
may take effect, the agency promulgating the rule must submit a rule 
report, which includes a copy of the rule, to each House of the 
Congress and to the Comptroller General of the United States. SBA will 
submit a report containing this rule and other required information to 
the U.S. Senate, the U.S. House of Representatives, and the Comptroller 
General of the United States. A major rule under the CRA cannot take 
effect until 60 days after it is published in the Federal Register. 
OMB's Office of Information and Regulatory Affairs has determined that 
this rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).

Final Regulatory Flexibility Analysis

    According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-
612, when an agency issues a rulemaking, it must prepare a regulatory 
flexibility analysis to address the impact of the rule on small 
entities. This final rule may have a significant impact on a 
substantial number of small businesses in the industries covered by 
this final rule. As described above, this final rule may affect small 
businesses seeking loans under SBA's 7(a), CDC/504, and EIDL loan 
programs, and assistance under other Federal small business programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis (FRFA) of this final rule addressing the following questions: 
(1) What is the need for, and objectives of the rule?; (2) What are 
significant issues raised by the public comments in response to the 
initial regulatory flexibility analysis, assessment of the agency of 
such issues, and any changes made in the proposed rule as a result of 
such comments?; (3) What's the agency's response to any comments filed 
by the Chief Counsel for Advocacy of the Small Business Administration 
in response to the proposed rule and description of any change made to 
the proposed rule in the final rule as a result of the comments?; (4) 
What is SBA's description and estimate of the number of small 
businesses to which the rule will apply?; (5) What are the projected 
reporting, record keeping, and other compliance requirements of the 
rule?; (6) What are the relevant Federal rules that may duplicate, 
overlap, or conflict with the rule?; (7) What alternatives will allow 
SBA to accomplish its regulatory objectives while minimizing the 
economic impact on small businesses?
    1. What is the need for, and objectives, of the rule?
    Changes in industry structure, technological changes, productivity 
growth, mergers and acquisitions, and updated industry definitions have 
changed the structure of many the industries covered by this final 
rule. Such changes can be enough to support revisions to current size 
standards for some industries. Based on the analysis of the latest data 
available, SBA believes that the size standards adopted in this final 
rule more appropriately reflect the size of businesses that need 
Federal assistance. The 2010 Jobs Act also requires SBA to review every 
five years all size standards and make necessary adjustments to reflect 
market conditions.
    2. What are the significant issues raised by the public comments in 
response to the initial regulatory flexibility analysis, assessment of 
the agency of such issues, and any changes made in the proposed rule as 
a result of such comments?
    SBA did not receive any public comments to the initial regulatory 
flexibility analysis it provided in the proposed rule.
    3. What is the agency's response to any comments filed by the Chief 
Counsel for Advocacy of the Small Business Administration in response 
to the proposed rule and description of any change made to the proposed 
rule in the final rule as a result of the comments?
    SBA did not receive any comments from the Chief Counsel for 
Advocacy of the Small Business Administration in response to the 
proposed rule.
    4. What is SBA's description and estimate of the number of small 
businesses to which the rule will apply, or an explanation of why no 
such estimate is available?
    Based on data from the 2012 Economic Census, SBA estimates that 
there are about 380,184 small firms covered by this rulemaking under 
industries with adopted changes to size standards. Under this final 
rule, SBA estimates that an additional 2,000 businesses will be defined 
as small.
    5. What are the projected reporting, record keeping and other 
compliance requirements of the rule?
    The size standard changes in this final rule impose no additional 
reporting or record keeping requirements on small businesses. However, 
qualifying for Federal procurement and a number of other programs 
requires that businesses register in the System for Award Management 
(SAM) and self-certify that they are small at least once annually (48 
CFR 52.204-13 (the Federal Acquisition Regulation (FAR)). For existing 
contracts, small business contractors are required to update their SAM 
registration as necessary to ensure that they reflect the contractor's 
current status (FAR 52.219-28). Businesses are also required to verify 
that their SAM registration is current, accurate, and complete with the 
submission of an offer for every new contract (FAR 52.204-7 and 52.204-
8). Therefore, businesses opting to participate in those programs must 
comply with SAM requirements. Changes in small business size standards 
do not result in additional costs associated with SAM initial 
registration or annual recertification. Changing size standards alters 
the access to SBA's programs that assist small businesses but does not 
impose a regulatory burden because they neither regulate nor control 
business behavior.
    6. What are the relevant Federal rules that may duplicate, overlap, 
or conflict with the rule?
    Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), Federal agencies must use SBA's size standards to define 
a small business, unless specifically authorized by statute to do 
otherwise. In 1995, SBA published in the Federal Register a list of 
statutory and regulatory size standards that identified the application 
of SBA's size standards as well as other size standards used by Federal 
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any 
Federal rule that would duplicate or conflict with establishing size 
standards.
    However, the Small Business Act and SBA's regulations allow Federal 
agencies to develop different size standards if they believe that SBA's 
size standards are not appropriate for their

[[Page 35882]]

programs, with the approval of SBA's Administrator (13 CFR 121.903). 
The Regulatory Flexibility Act authorizes an agency to establish an 
alternative small business definition, after consultation with the 
Office of Advocacy of the U.S. Small Business Administration (5 U.S.C. 
601(3)).
    7. What alternatives will allow SBA to accomplish its regulatory 
objectives while minimizing the impact on small entities?
    By law, SBA is required to develop numerical size standards for 
establishing eligibility for Federal small business assistance 
programs. Other than varying size standards by industry and changing 
the size measures, no practical alternative exists to the systems of 
numerical size standards.
    However, SBA considered two alternatives to increasing 57 and 
maintaining 80 size standards at their current levels. The first 
alternative SBA considered was adopting size standards revisions based 
solely on the analytical results. In other words, the size standards of 
57 industries for which the analytical results suggest raising size 
standards would be raised. However, the size standards of 66 industries 
for which the analytical results suggest lowering them would be 
lowered. This would cause a significant number of small businesses to 
lose their small business status in both Sectors 42 and 44-45 (see 
Table 7). Under the second alternative, in view of the COVID-19 
pandemic, SBA considered retaining all size standards at the current 
levels, even though the analytical results suggested increasing 57 and 
decreasing 66 size standards. SBA believes retaining all size standards 
at their current levels would be more onerous for small businesses than 
the option of increasing 57 and retaining 80 size standards. Postponing 
the adoption of the higher calculated size standards in 57 industries 
would be detrimental for otherwise small businesses in terms of access 
to various small business benefits, including access to SBA's financial 
assistance programs and exemptions from paperwork and other compliance 
requirements.

Executive Order 13563

    Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, reducing costs, harmonizing rules, and promoting 
flexibility. A description of the need for this regulatory action and 
benefits and costs associated with this action, including possible 
distributional impacts that relate to Executive Order 13563, is 
included above in the Regulatory Impact Analysis under Executive Order 
12866. Additionally, Executive Order 13563, section 6, calls for 
retrospective analyses of existing rules.
    The review of size standards in the industries covered by this 
final rule is consistent with section 6 of Executive Order 13563 and 
the 2010 Jobs Act, which requires SBA to review all size standards and 
make necessary adjustments to reflect market conditions. Specifically, 
the 2010 Jobs Act requires SBA to review at least one-third of all size 
standards during every 18-month period from the date of its enactment 
(September 27, 2010) and to review all size standards not less 
frequently than once every five years, thereafter. SBA had already 
launched a comprehensive review of size standards in 2007. In 
accordance with the Jobs Act, in early 2016, SBA completed the first 
five-year review of all small business size standards, except those for 
agricultural enterprises previously set by Congress, and made 
appropriate adjustments to size standards for a number of industries to 
reflect current Federal and industry market conditions. Prior to 2007, 
the last time SBA conducted a comprehensive review of all size 
standards was during the late 1970s and early 1980s.
    SBA issued a white paper entitled ``Size Standards Methodology'' 
and published a notification in the April 11, 2019, edition of the 
Federal Register (84 FR 14587) to advise the public that the document 
is available for public review. The ``Size Standards Methodology'' 
white paper explains how SBA establishes, reviews, and modifies its 
receipts-based and employee-based small business size standards. The 
methodology also provides descriptions of methodologies SBA employs to 
adjust monetary-based size standards for inflation and to update size 
standards to adopt the OMB's quinquennial NAICS revisions. SBA 
considered all input, suggestions, recommendations, and relevant 
information obtained from industry groups, individual businesses, and 
Federal agencies in developing size standards for those industries 
covered by this final rule. SBA received a total of nine comments to 
the proposed rule. In the Discussion of Comments section of this final 
rule, SBA summarizes comments received on the proposed rule and 
provides its responses.

Executive Order 12988

    This action meets applicable standards set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    For purposes of Executive Order 13132, SBA has determined that this 
final rule will not have substantial, direct effects on the States, on 
the relationship between the National Government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. Therefore, SBA has determined that this final rule has 
no federalism implications warranting preparation of a federalism 
assessment.

Paperwork Reduction Act

    For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, 
SBA has determined that this final rule will not impose any new 
reporting or record keeping requirements.

List of Subjects in 13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Individuals with 
disabilities, Loan programs--business, Reporting and recordkeeping 
requirements, Small businesses.

    For the reasons set forth in the preamble, SBA amends 13 CFR part 
121 as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for part 121 is revised to read as follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(a)(36), 662, and 
694a(9); 15 U.S.C. 9012.


0
2. In Sec.  121.201, amend the table ``Small Business Size Standards by 
NAICS Industry'' by revising entries ``423140,'' ''423330,'' 
``423460,'' ``423520,'' ``423620,'' ``423730,'' ``423740,'' ``423820,'' 
``423840,'' ``423850,'' ``423860,'' ``423920,'' ``423930,'' ``423940,'' 
``424110,'' ``424450,'' ``424520,'' ``424590,'' ``424690,'' ``424710,'' 
``425110,'' ``425120,'' ``441310,'' ``441320,'' ``442291,'' ``442299,'' 
``443141,'' ``444130,'' ``444210,'' ``444220,'' ``445291,'' ``445292,'' 
``445299,'' ``445310,'' ``446110,'' ``446130,'' ``446191,'' ``446199,'' 
``447190,'' ``448110,'' ``448150,'' ``448190,'' ``448310,'' ``448320,'' 
``451110,'' ``451120,'' ``451140,'' ``451211,'' ``451212,'' ``452311,'' 
``453220,'' ``453310,'' ``453910,'' ``453920,'' ``453998,'' ``454210,'' 
and ``454390'' to read as follows:

[[Page 35883]]

Sec.  121.201  What size standards has SBA identified by North American 
Industry Classification System codes?

* * * * *

                                 Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
                                                                                  Size standards  Size standards
        NAICS codes                       NAICS U.S. industry title               in millions of   in number of
                                                                                      dollars        employees
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                           Sector 42--Wholesale Trade
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                               Subsector 423--Merchant Wholesalers, Durable Goods
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
423140.....................  Motor Vehicle Parts (Used) Merchant Wholesalers....  ..............             125
 
                                                  * * * * * * *
423330.....................  Roofing, Siding, and Insulation Material Merchant    ..............             225
                              Wholesalers.
 
                                                  * * * * * * *
423460.....................  Ophthalmic Goods Merchant Wholesalers..............  ..............             175
 
                                                  * * * * * * *
423520.....................  Coal and Other Mineral and Ore Merchant Wholesalers  ..............             200
 
                                                  * * * * * * *
423620.....................  Household Appliances, Electric Housewares, and       ..............             225
                              Consumer Electronics Merchant Wholesalers.
 
                                                  * * * * * * *
423730.....................  Warm Air Heating and Air-Conditioning Equipment and  ..............             175
                              Supplies Merchant Wholesalers.
423740.....................  Refrigeration Equipment and Supplies Merchant        ..............             125
                              Wholesalers.
 
                                                  * * * * * * *
423820.....................  Farm and Garden Machinery and Equipment Merchant     ..............             125
                              Wholesalers.
 
                                                  * * * * * * *
423840.....................  Industrial Supplies Merchant Wholesalers...........  ..............             125
423850.....................  Service Establishment Equipment and Supplies         ..............             125
                              Merchant Wholesalers.
423860.....................  Transportation Equipment and Supplies (except Motor  ..............             175
                              Vehicle) Merchant Wholesalers.
 
                                                  * * * * * * *
423920.....................  Toy and Hobby Goods and Supplies Merchant            ..............             175
                              Wholesalers.
423930.....................  Recyclable Material Merchant Wholesalers...........  ..............             125
423940.....................  Jewelry, Watch, Precious Stone, and Precious Metal   ..............             125
                              Merchant Wholesalers.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                              Subsector 424--Merchant Wholesalers, Nondurable Goods
----------------------------------------------------------------------------------------------------------------
424110.....................  Printing and Writing Paper Merchant Wholesalers....  ..............             225
 
                                                  * * * * * * *
424450.....................  Confectionery Merchant Wholesalers.................  ..............             225
 
                                                  * * * * * * *
424520.....................  Livestock Merchant Wholesalers.....................  ..............             125
424590.....................  Other Farm Product Raw Material Merchant             ..............             175
                              Wholesalers.
 
                                                  * * * * * * *
424690.....................  Other Chemical and Allied Products Merchant          ..............             175
                              Wholesalers.
424710.....................  Petroleum Bulk Stations and Terminals..............  ..............             225
 

[[Page 35884]]

 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                       Subsector 425--Wholesale Electronic Markets and Agents and Brokers
----------------------------------------------------------------------------------------------------------------
425110.....................  Business to Business Electronic Markets............  ..............             125
425120.....................  Wholesale Trade Agents and Brokers.................  ..............             125
----------------------------------------------------------------------------------------------------------------
                                           Sector 44-45--Retail Trade
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                 Subsector 441--Motor Vehicle and Parts Dealers
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
441310.....................  Automotive Parts and Accessories Stores............           $25.0  ..............
441320.....................  Tire Dealers.......................................            22.5  ..............
----------------------------------------------------------------------------------------------------------------
                              Subsector 442--Furniture and Home Furnishings Stores
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
442291.....................  Window Treatment Stores............................            10.0  ..............
442299.....................  All Other Home Furnishings Stores..................            29.5  ..............
----------------------------------------------------------------------------------------------------------------
                                 Subsector 443--Electronics and Appliance Stores
----------------------------------------------------------------------------------------------------------------
443141.....................  Household Appliance Stores.........................            19.5  ..............
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                   Subsector 444--Building Material and Garden Equipment and Supplies Dealers
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
444130.....................  Hardware Stores....................................            14.5  ..............
 
                                                  * * * * * * *
444210.....................  Outdoor Power Equipment Stores.....................             8.5  ..............
444220.....................  Nursery, Garden Center, and Farm Supply Stores.....            19.0  ..............
----------------------------------------------------------------------------------------------------------------
                                     Subsector 445--Food and Beverage Stores
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
445291.....................  Baked Goods Stores.................................            14.0  ..............
445292.....................  Confectionery and Nut Stores.......................            17.0  ..............
445299.....................  All Other Specialty Food Stores....................             9.0  ..............
445310.....................  Beer, Wine, and Liquor Stores......................             9.0  ..............
----------------------------------------------------------------------------------------------------------------
                                 Subsector 446--Health and Personal Care Stores
----------------------------------------------------------------------------------------------------------------
446110.....................  Pharmacies and Drug Stores.........................            33.0  ..............
 
                                                  * * * * * * *
446130.....................  Optical Goods Stores...............................            26.0  ..............
446191.....................  Food (Health) Supplement Stores....................            20.0  ..............
446199.....................  All Other Health and Personal Care Stores..........             8.5  ..............
----------------------------------------------------------------------------------------------------------------
                                        Subsector 447--Gasoline Stations
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
447190.....................  Other Gasoline Stations............................            29.5  ..............
----------------------------------------------------------------------------------------------------------------
                             Subsector 448--Clothing and Clothing Accessories Stores
----------------------------------------------------------------------------------------------------------------
448110.....................  Men's Clothing Stores..............................            22.5  ..............
 

[[Page 35885]]

 
                                                  * * * * * * *
448150.....................  Clothing Accessories Stores........................            29.5  ..............
448190.....................  Other Clothing Stores..............................            27.5  ..............
 
                                                  * * * * * * *
448310.....................  Jewelry Stores.....................................            18.0  ..............
448320.....................  Luggage and Leather Goods Stores...................            33.5  ..............
----------------------------------------------------------------------------------------------------------------
                           Subsector 451--Sporting Good, Hobby, Book and Music Stores
----------------------------------------------------------------------------------------------------------------
451110.....................  Sporting Goods Stores..............................            23.5  ..............
451120.....................  Hobby, Toy, and Game Stores........................            31.0  ..............
 
                                                  * * * * * * *
451140.....................  Musical Instrument and Supplies Stores.............            20.0  ..............
451211.....................  Book Stores........................................            31.5  ..............
451212.....................  News Dealers and Newsstands........................            20.0  ..............
----------------------------------------------------------------------------------------------------------------
                                    Subsector 452--General Merchandise Stores
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
452311.....................  Warehouse Clubs and Supercenters...................            41.5  ..............
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                  Subsector 453--Miscellaneous Store Retailers
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
453220.....................  Gift, Novelty, and Souvenir Stores.................            12.0  ..............
453310.....................  Used Merchandise Stores............................            12.5  ..............
453910.....................  Pet and Pet Supplies Stores........................            28.0  ..............
453920.....................  Art Dealers........................................            14.5  ..............
 
                                                  * * * * * * *
453998.....................  All Other Miscellaneous Store Retailers (except                10.0  ..............
                              Tobacco Stores).
----------------------------------------------------------------------------------------------------------------
                                        Subsector 454--Nonstore Retailers
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
454210.....................  Vending Machine Operators..........................            18.5  ..............
 
                                                  * * * * * * *
454390.....................  Other Direct Selling Establishments................            13.0  ..............
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2022-12512 Filed 6-13-22; 8:45 am]
BILLING CODE 8026-03-P


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