Effective January 6, 2020, the SBA has issued a Final Rule on how to calculate a small business’ size for all receipts-based size standards. Now, a small business’ size is based on the average of its last five (5) years of receipts. This is a change from the prior three (3) year receipts period. Thus, for all receipts-based size standards, the SBA will evaluate a company’s size by calculating its average annual receipts over the last five (5) completed fiscal years.
This could help or hurt small businesses. To avoid possible shocks to system, the SBA will allow firms to choose either the 3-year or 5-year calculation until January 6, 2022. After that, the 5-year receipts rule will apply to everyone.
