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SBA Tries to Rewrite the Small Biz Definition

The numbers are confusing. A small business in the retail and service industry, as designated by the U.S. Small Business Administration, is defined as a company that makes less than $6 million, unless it is a wholesale trade business.

Then the regulations are defined as fewer than 100 employees. Or it could be, if the business has fewer than 500 employees, if they are in the manufacturing and mining industries.

A lot of confusion over the definition of a small business will be sorted out in the next several months as the SBA hits the road soliciting small-business owners and industry executives on how to improve the agency’s size standards regulations.

“Small-business size standards are very important because they define the maximum size of small businesses for purposes of obtaining federal government contracts,” said George Chandler, the local SBA district director. “To assure equitable treatment among small businesses it’s important that the appropriate size standard is selected to assure that only small businesses that are independently owned and operated and are not dominant in the field are designated as a small business.”

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The size standards were originally proposed by the SBA to be restructured more than a year ago, in which the agency looked to reduce the number of different size categories from 37 to 10, and express all standards in terms of the number of a company’s employees.

The SBA is set to visit 11 cities, with the nearest location to San Diego being Los Angeles.

The SBA will discuss the size standards and ways to help simplify and restructure them to help businesses better understand and use the standards.

The SBA, which has already received more than 6,000 comments regarding size standards, will consider new rules once a thorough review of comments received from the public is completed.

The agency is scheduled to hold its Los Angeles public hearing June 29. The time and place have yet to be announced.

Comments can also be filed with the SBA through the Web site www.regulations.gov.

For information, go to www.sba.gov/size.

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Ruling Bars Creditors:

In a ruling issued last month by the U.S. Supreme Court, Individual Retirement Accounts, or IRAs, are protected from creditors in the case of bankruptcy.

The April ruling now means that if an individual files for bankruptcy, creditors will not be able to access their IRA to pay off debts.

Graydon Coghlan, the chief executive officer of Coghlan Financial Group, LLC, a La Jolla-based financial and retirement planning company, said that for small businesses this ruling is good news.

IRAs are a critical source of retirement savings for the self-employed, workers without company plans and those who have rolled over distributions from former employers.

“This is such an important ruling,” he said. “It is extremely important for small and self-employed business owners because this is their primary source to save for retirement.”

And for small businesses that are often in high-risk financial positions, they can now put money into their IRA without worrying it will be taken if disaster strikes.

Before the ruling, state law allowed California bankruptcy courts to decide how much of the IRA could be used to repay creditors.

The ruling, which was unanimously passed by the Supreme Court on April 4, overrides states and lower courts rulings and sets a uniform nationwide standard.

The ruling, however, applies only to bankruptcy creditors.

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Winning With A Plan:

SCORE, the counselors to America’s small businesses, is holding “How to Write a Winning Business Plan” from 8:30 a.m. to 4:15 p.m. on May 24.

The workshop will discuss how to create or revise a business plan and is set for the Mission Valley campus of Point Loma Nazarene University, 4007 Camino del Rio S.

The cost is $89 in advance or $99 at the door.

For information, call (619) 557-7272.


Send small-business news to Lisa Kovach via fax at (858) 571-3628 or e-mail at lkovach@sdbj.com. Call her at (858) 277-6359, Ext. 3107.

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