28 CFR Part 36 Nondiscrimination on the Basis of Disability by Public Accommodations and in Commercial Facilities NPRM: Preamble (2008 Title III NPRM Preamble)

"Qualified Small Business" (Section-by-Section Analysis)

A qualified small business is a business entity defined as a small business concern under the regulations promulgated by the Small Business Administration (SBA) pursuant to the Small Business Act.  See 15 U.S.C. 632; 13 CFR part 121.  Under section 3(a)(2)(C) of the Small Business Act, federal departments and agencies are prohibited from prescribing a size standard for categorizing a business concern as a small business unless they have been specifically authorized to do so or have proposed a size standard in compliance with the criteria set forth in the SBA regulations, have provided an opportunity for public notice and comment on the proposed standard, and have received approval from the Administrator of the SBA to use the standard.  See id.  Federal agencies or departments promulgating regulations relating to small businesses usually use SBA size criteria.  If they decide otherwise, they must be prepared to justify how they arrived at a different standard and why the SBA's regulations do not satisfy the agency's program requirements.  See 13 CFR 121.903.

The ADA does not define "small business" or specifically authorize the Department to prescribe size standards.  The Department believes that the size standards SBA has developed are appropriate for determining which businesses subject to the ADA should be subject to the proposed safe harbor provisions.  Therefore, the Department proposes to adopt the SBA's size standards to define small businesses under the ADA.

The SBA's small business size standards define the maximum size that a concern, together with all of its affiliates, may be if it is to be eligible for federal small business programs or to be considered a small business for the purpose of other federal agency programs.  Concerns primarily engaged in the same kind of economic activity are classified in the same industry regardless of their types of ownership (such as sole proprietorship, partnership or corporation). Approximately 1200 industries are described in detail in the North American Industry Classification System United States, 2007.  For most places of public accommodation, the SBA has established a size standard based on average annual receipts.  The majority of places of public accommodation will be classified as small businesses if their average annual receipts are less than $ 6.5 million.  However, some will qualify with higher annual receipts.  The SBA's small business size standards should be familiar to most small businesses.  Current standards, which can only be changed after notice and comment rulemaking, are available at http://www.census.gov/epcd/naics07/naics07fr3.htm.