The U.S. Small Business Administration (SBA), in accordance with the Small Business Runway Extension Act of 2018, recently issued its much-anticipated final rule to modify its method for calculating average annual receipts used to prescribe size standards for small businesses.

Here are the key takeaways from SBA’s final rule:

• SBA is changing its regulations on the calculation of average annual receipts for all of SBA’s receipts-based size standards, and for other agencies’ proposed receipts-based size standards, from a 3-year averaging period to a 5-year averaging period, outside of the SBA Business Loan and Disaster Loan Programs.
• Importantly, for all programs other than the SBA Business Loan and Disaster Loan Programs, SBA is adopting a transition period through January 6, 2022, during which firms may choose between using a 3-year averaging period and a 5-year averaging period.
• SBA’s final rule in this regard is effective January 6, 2020.