Changing economic conditions demand modifications to lending and credit standards, and the U.S. Small Business Administration appears to be taking steps toward that end. The government agency recently reported it has updated its definition of "small business" across a number of industries, thereby opening the door for more startups and small enterprises to obtain SBA loans.
Specifically, the SBA released 37 updated revenue-based size definitions of small businesses across 34 market services sectors. The new size standards will go into effect March 12.
SBA officials weighed trends in inflation, recent economic stagnation, market competition, federal contracting activity and average company size in drafting the new definitions.
Despite its effort to spur private business lending through SBA-backing, some critics maintain the new definitions do not go far enough or fail to account for certain factors.
"Some industries, such as architecture and engineering, are grouped together, and the combination can cause some issues," Molly Brogan, spokeswoman for the National Small Business Association, told CNBC. "Another concern is there may be enhanced competition from businesses on the larger end of the scale that are now classified as a small business."
For companies that employ fewer than 15 people, it is often difficult to compete for loans against firms with hundreds of employees.