HOW BIG IS A SMALL BUSINESS?
The Small Business Administration is continuing to look at what constitutes a small business, and has now proposed changes to so-called "size standards" for utilities, construction companies and those in the arts, entertainment and recreation sectors. The changes are aimed at making it possible for more companies to be deemed small businesses — and therefore eligible for SBA loans and government contracts.
Earlier this year, the government revised size standards for health care firms, social assistance companies and those in the transportation and warehousing sectors. The moves were authorized under the Small Business Jobs Act of 2010.
Among the SBA's most recent proposals: Basing size standards for six industries dealing with electric power, distribution and transmission on the size of a company's work force, not its revenue. The SBA estimates that would make as many as 400 utilities firms eligible for its programs.
In the arts, entertainment and recreation sector, the SBA proposed raising the amount of revenue that a company can have and still qualify as a small business. For example, sports teams would be able to book $35.5 million in revenue, about five times what they can show under current rules. The SBA estimates that as many as 1,450 additional companies in the sector could be considered small businesses if the change takes effect.
Revenue thresholds also were lifted in two construction industries. Companies involved in dredging and surface cleanup could bring in $30 million in revenue, up from $20 million. The new limit could give 400 more companies SBA-loan eligibility, the agency says.
The proposed changes are subject to public comment prior to being adopted. You can see the proposals and comments at www.regulations.gov . Search for Rule Identification Number (RIN) 3245-AG25 for the utilities industries, 3245-AG36 for the arts, entertainment and recreation sector, and 3245-AG37 for construction industries.
MEDICAL PRACTICES DISAPPEAR
The number of doctor-run small businesses, including solo practitioners and group practices, is shrinking. Last week, the House Small Business Subcommittee on Investigations, Oversight and Regulations held a hearing about that decline. Rep. Mike Coffman, R-Colo., the subcommittee chairman, cited statistics from physician-recruiting firm Merritt Hawkins showing that in 2011, only 1 percent of its searches were for independent physicians. That compares with 22 percent in 2004.
Dr. Louis McIntyre, an orthopedist in White Plains, N.Y., testified before the subcommittee that the physician group that he's part of was forced to become part of a local hospital — resulting in the doctors losing their ownership stake and becoming employees. The practice contended with lower reimbursements from insurance companies and the government, greater demands for more information from insurers and higher expenses for diagnostic and other equipment. He said the group faces the prospect of even less reimbursement under the health care overhaul upheld by the Supreme Court last month. McIntyre told the subcommittee that there will be greater demand for doctors when the health care law fully takes effect in 2014, but that the disappearance of private practices is likely to hurt patients' ability to get the care they need.
Dr. Jerry Kennett, a cardiologist in Columbia, Mo., said the group he belongs to also has become part of a local hospital. He said cuts in Medicare reimbursement were a significant factor in the move, as well as increased administrative and regulatory requirements.
"All these add up to tremendous uncertainty among physicians as to what the future holds and so many physician practices see hospital integration as their only choice," Kennett said.
RETAIL REPORT CARD
Finally some good news for small retailers.
Independent shops had a better June than their larger counterparts. A report by MasterCard and Wells Fargo & Co. found that spending at small retailers rose 8 percent from June 2011, compared with an overall increase for the U.S. retail industry of 6.9 percent. Excluding sales of food, gas and cars, sales at small businesses rose 7.5 percent from a year earlier.
The report also found that sales growth has been stronger at smaller retailers for 10 straight months.
The report is based on purchases made in the MasterCard network, and also includes estimates for other types of payments including cash and checks. Most of the retailers have less than $10 million in annual sales. All retailers included in the report have annual sales of less than $35 million and fewer than 200 employees.
The data is at odds with the government's report on retail sales, which showed a drop of 0.5 percent in June — the third straight month of declines. However, the Commerce Department's report includes large chain stores and excludes spending on services, which represents a larger portion of the economy.