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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: May 31, 2002

SUBJECT: Small Business Administration; Small Business Size Standard for Travel Agencies

SOURCE: Federal Register, May 31, 2002, Vol. 67, No. 105, pages 38183 and 38186

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rules

SYNOPSIS: SBA is permanently increasing the small business size standard for travel agencies (North American Industry Classification System (NAICS) code 561510) from $1,000,000 to $3,000,000. In addition, SBA is finalizing the interim final rule which retroactively increased the small business size standard for travel agencies to $3,000,000 for purposes of eligibility for economic injury disaster loan (EIDL) assistance attributed to the September 11, 2001, terrorist attacks on the World Trade Center and the Pentagon.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations (CFR). The SBA small business size regulations are in Chapter 1, Small Business Administration; Part 121, Small Business Size Regulations; Subpart A, Size Eligibility Provisions and Standards; Section 121.201, What size standards has SBA identified by North American Industry Classification System codes?

The SBA's EIDL regulations are in Title 13 of the Code of Federal Regulations (CFR), "Chapter 1, Small Business Administration," "Part 123, Disaster Loan Program".

For more on the proposed size standard increase for travel agencies, and the interim final increase in the small business size standard for travel agencies for EIDL assistance purposes, see the March 15, 2002, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Small Business Size Standard for Travel Agencies."

For more on the EIDL regulations pertaining to the terrorist attacks on the World Trade Center and the Pentagon, see the October 22, 2001, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Disaster Loan Program," and the January 15, 2002, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Disaster Loan Program."

DATES: The final rule increasing in the travel agencies' size standard for EIDL purposes is effective May 31, 2002. The increase in travel agencies' size standard applicable to the entire industry is effective July 1, 2002.

FOR FURTHER INFORMATION CONTACT: Diane Heal, Office of Size Standards, 202-205-6618.

SUPPLEMENTAL INFORMATION: On March 15, 2002, SBA published a proposal to increase the $1,000,000 size standard for travel agencies to $3,000,000 because SBA agreed with many in the industry that the cost of doing business had increased to the point that the pool of eligible small businesses performing government and corporate client travel services had seriously declined. (EDITOR'S NOTE: The size standard for the travel agencies industry was not increased by 15.8% effective February 22, 2002, as were most service industries, because SBA was already in the process of reevaluating the travel agencies size standard to reflect changing industry conditions. For more on the 15.8% increase in the size standards for service industries, see January 23, 2002, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Inflation Adjustment to Size Standards for Service Industries.")

SBA received comments from five respondents on the proposed increase: two were in favor of the proposed increase, and three opposed (two recommended that the 15.8% inflation adjustment be applied, and one recommended a $2,000,000 size standard). SBA did not feel that the opposing comments were compelling, so it is finalizing the proposed rule without changes. This size standard change will increase the number of small businesses in the travel agencies industry by 732, from 21,505 to 22,237 (out of a total of 22,687 - 98% of the population will be considered small).

Also, SBA is finalizing the March 15, 2002, interim final rule that increased the small business size standard for travel agencies to $3,000,000 for EIDL purposes only, and made the change retroactive to September 11, 2001. SBA received no comments on the interim final rule.

This change is intended to provide much needed financial assistance to one of the industries that was hardest hit by the terrorist attacks by allowing more travel agencies to qualify for EIDLs. Because of the terrorist attacks, the traveling public cancelled and rescheduled existing travel arrangements and many postponed further travel. As a result, many small travel agencies have seen their business decline by 20% to 50% since September 11, 2001.

In addition, the interim final rule changed the date as of which the size status of an eligible travel agency is determined for purposes of EIDL applications related to the terrorist attacks. The EIDL regulations require an applicant for an EIDL loan to be small as of the date the disaster commenced. However, for September 11 EIDL assistance, SBA changed the date on which an applicant's size status is determined to "the date SBA accepts the application for processing." This change is finalized, too.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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