Decreeing that "small" is bigger than it used to be, the Small Business Administration yesterday revealed a new yardstick for measuring the size of businesses.
The new standard is expected to mean that 150,000 companies no longer will be eligible for federal aid to small busines because they are too big.
But 95 percent of the businesses in the United States will still be, officially, small, including some with as many as 2,500 workers on their payroll.
Businesses that are classified by the government as small are eligible for millions of dollars of free federal assistance, for low-interest loans guaranteed by the government and for special advantage in bidding on government contracts.
With so much money at stake the SBA's new definition of small is likely to produce books full of debate, discussion and dissent.
Congressional hearings on how big small is are being planned by a House small businesses subcommittee headed by Rep. John LaFlace (D-N.Y.).
Rep. Neal Smith (D-Iowa), chairman of the House Small Business Committee, already has challenged the new SBA yardstick as it applies to farmers.
Farmers are now considered small business, but under the new definition of small, larger farms would be excluded from SBA programs.
SBA officials said farmers are the biggest group that would be ruled out by their new yardstick, but some retailers, service and construction firms also would not measure up.
In most cases, however, the SBA rules are believed to permit small businesses to be bigger than before.
It's hard to be certain, however, because SBA is not only changing the definition of small, it is also switching measurement systems.
SBA used to measure the size of businesses in dollars (of annual revenue) but under the new system will only count the number of employes.
How many workers a company can have and still qualify as small ranges from 15 to 2,500. It all depends on whether the company is in a yield that's dominated by small businesses or big businesses, SBA officials tried to explain yesterday.
In businesses where big companies dominate -- like oil refining, tire making, glass production gypsum mining, the definition of small extends to 2,500-worker companies.
Small businesses in those fields might have annual sales of hundreds of millions of dollars, SBA officials acknowledge. But they will still be small, compared to the giants that dominate the industry and need government aid to encourage competition.
In the fields that are already highly competitive, a business will be allowed to have no more than 15 people on the payroll to qualify as small. Gas stations, laundromats, barber shops, appliance stores and photographic studios are in that class.
In each of 726 individual industries, SBA plans to set a similar top limit on the number of workers employed by small firms.
SBA Deputy Administration William Mauk said the new definition of small was written because it is simpler than the one previously used.
The SBA should be eliminated or its programs severely cut back as one of the first steps toward reducing federal spending, Sen. William Proxmire (D-Wis.) said Yesterday.