Today, the Small Business Administration (SBA) issued a direct final rule extending the HUBZone map freeze from December 31, 2021, to June 30, 2023. The direct final rule (available here) takes effect on June 21, 2021. This is the latest in a series of developments for the HUBZone Program in 2021; read PilieroMazza’s previous coverage on the developments impacting the HUBZone Program here and here.
Several years ago, SBA froze the HUBZone maps until December 31, 2021, to ensure that firms would have enough time to plan after seeing how the results of the 2020 Census would impact the HUBZone maps. However, due to the pandemic, the 2020 Census results are behind schedule and SBA does not expect to have the data it needs until December 2022. Therefore, to ensure HUBZone firms have enough time to plan around the new HUBZone maps based on the 2020 Census data, SBA’s direct final rule will keep the HUBZone maps “on ice” until June 30, 2023. Pushing back the anticipated “thaw” for another 1.5 years will give SBA time to incorporate the 2020 Census data into the HUBZone maps and then provide adequate notice to the HUBZone small business community.
SBA’s direct final rule is a welcome change for many HUBZone firms that were facing the loss of their HUBZone status at the end of this year. As discussed in our prior HUBZone client alerts this year, HUBZone firms located in so-called redesignated areas were facing a difficult choice in 2021 based on the anticipated loss of HUBZone status for their area after December 31st. The extended freeze on the HUBZone maps means that these companies currently located in a redesignated area will now have until June 30, 2023, to maintain HUBZone eligibility in their current principal office location. It is also possible that, once the HUBZone maps are updated to reflect the 2020 Census data, some areas that are currently in redesignated status could come back into the HUBZone program by the time the HUBZone maps unfreeze after June 30, 2023.
PilieroMazza supports this final rule and applauds SBA for issuing the rule now to alleviate the need for firms to make critical office space decisions before the 2020 Census results are known. With the additional time to incorporate and understand how the 2020 Census will impact the HUBZone maps, this rule gives HUBZone firms necessary certainty and time to prepare.