The Strange World of the Small Business Administration

Daniel Farber

July 19, 2013

When you say “small business,” most people probably imagine a mom-and-pop corner grocery.  Actually, the federal Small Business Administration’s concept of small goes well beyond that.  For instance, it includes a computer business that does up to $25 million per year in business. A convenience store can do $27 million and still be considered “small,” while a grocery store can go up to $30 million. If you’re in parts of the financial sector, you can do $175 million in business a year and still be a “small business.”

In many other areas, the size requirement is set in terms of numbers of employees—usually 500, but sometimes 1000 or more.  There are wonderfully detailed sub-categories such as “Motor Vehicle Steering and Suspension Components (except Spring) Manufacturing” and the nostalgia-inducing “Carbon Paper and Inked Ribbon Manufacturing.”  (Couldn’t find a heading for buggy-whip manufacturers, however.)  Anyway, each and every one of these businesses is, for some mysterious reason, entitled to the special care and solicitude of the U.S. government.

But the Small Business Administration seems remarkably attentive even to firms that exceed even this generous definition of small business. The Office of Advocacy also is willing to go the extra mile for big business groups like the American Chemistry Council.

It no longer seems to focus on the special needs of smaller (or maybe I should say “less large”) businesses. Instead, studies by the Center for Progressive Reform and the Center for Effective Government shown, the SBA now acts as a mouthpiece for the business community as a whole, often echoing the views of Big Business. For instance, it pressured the EPA not to regulate arsenic, fine particles, and lead emissions from coal power plants. It has also opposed regulations of formaldehyde, styrene, and chromium, as well as arguing that EPA should not regulate greenhouse gases (apparently on grounds that the Supreme Court had already rejected in a previous case). It also shows up at meetings flanked by major corporations like ExxonMobil to argue in favor of watering down regulations.

Of course, the business community is entitled to advocate their viewpoints to regulators, and they spend many millions of dollars to do so.  But why should the U.S. government hire people to act as back-up lobbyists for the well-funded efforts of the Chamber of Commerce, major trade associations, and Fortune 500 companies?

Cross-posted from the environmental law and policy blog Legal Planet.

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