The Small Business Runway Extension Act of 2018 allows growing businesses to be considered “small” for a longer period of time. The stated purpose, per the House Committee on Small Business, is to help small contractors “navigate the middle market as they reach the upper limits of their small size standard.”
On December 17, 2018, President Trump signed the Small Business Runway Extension Act of 2018 (also known as H.R. 6330) into law. In doing so, Section 3(a)(2)(C)(ii)(II) of the Small Business Act was thus amended by extending the period of time under which annual average gross receipts are considered from not less than three years to not less than five years, effectively extending the measurement period for another two years.
If a federal contractor qualifies as a small business, is doing well, and quickly growing, the Small Business Runway Extension Act of 2018 allows it to categorize itself as “small” for a longer period of time in order to establish the presence and infrastructure necessary to be a fierce competitor. This is a benefit to the small business in the same way that it benefits a wrestler to be on the high-end of their weight class. Instead of being a small competitor in a larger class, a business that is allowed to remain “small” still has opportunity to seek assistance and grow, so that when they do enter the next level, they are in their best fighting shape.
This would also, of course, impact a business’s eligibility for any resources and assistance offered by the Small Business Administration and other agencies.
When does H.R. 6330 go into effect?
Since it has been signed into law by the President, H.R. 6330 is immediately in effect, technically. However, there is still some ambiguity as to how the Small Business Administration and other impacted agencies will view and implement the change, absent regulations.
This extension of the Small Business Act does not come without some drawbacks. There is potential that the Small Business Runway Extension Act of 2018 could backfire on companies going the other way; forcing a large company in decline to be categorized as large for longer and keeping them from assistance.
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