iIf your Disadvantaged Business Enterprise (DBE) company is successful and growing, you will need to pay attention to how close your business is getting to the ceiling- the maximum company size that you can have and still be certified as a DBE.
What are the set size limitations?
49 C.F.R. §26.65 governs how the program makes business size determinations. First, there is a level of gross receipts that the business cannot surpass. For 2023, that number is $30.40 million, averaged over the past three years. That number is adjusted every year. If your company’s gross receipts are more than that number, then the company is no longer eligible to be a DBE.
The second threshold is that the company must meet the SBA business size standards appropriate to the type of work that the company performs. Those numbers are listed by NAICS codes. NAICS stands for North American Industry Classification System and is a standard used by federal agencies to classify businesses. The SBA business size standards are set forth in 13 CFR § 121.201 and can be found here: https://www.ecfr.gov/current/title-13/chapter-I/part- 121#121.201.
The SBA size standards are mostly by average annual receipts, but some categories are by number of employees.
How are the annual receipts calculated?
The DBE program follows the guideline set forth in 13 CFR §131.104. Receipts “means all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees or commissions, reduced by returns and allowances.”
Receipts do not include “net capital gains or losses; taxes collected for and remitted to a taxing authority if included in gross or total income, such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees; proceeds from transactions between a concern and its domestic or foreign affiliates; and amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker.” For size determination, these are the only exclusions.
How are number of employees calculated?
For NAICS classifications where size is governed by number of employees, that calculation falls under 13 CFR §121.106. All employees count, whether they be full-time, part-time, or obtained from a temp agency. Volunteers are not considered employees for size determination purposes.
The calculation is made looking at the average number of employees in the company based upon number of employees for each pay period for the prior 24 calendar months. Part-time employees count the same as full-time.
