The Small Business Administration just announced a new regulation that will require small businesses with federal contracts to be recertified as small-businesses every five years, or whenever they're acquired or merged with another company. A business determined to no longer be "small," as classified by the SBA's size standards, will be able to continue its federal contract under the same terms, but the government can no longer count it toward its small-business award goals. Congress decided a few years ago that the government should aim to have 23% of all prime-dollar federal contracts go to small businesses. The new regulation takes effect June 30, 2007. The move comes after years of small businesses complaining that the government was awarding large businesses and corporations contract dollars that it claimed were earmarked for small businesses. A 2003 Government Accountability Office report found that five large companies received $460 million in small business awards, primarily because the government let a business be classified as a small business over the life of the contracts -- which can last up to 20 years. Other reports, including those by the SBA's own Office of Advocacy, came to similar conclusions. Some critics of the new regulation, such as the American Small Business League, say the new rule doesn't go far enough to solve the problem and that businesses with contracts should be re-certified every year -- not just every five years. SBA's Karen Hontz said in a recent interview that the agency decided to make it every five years because, "We got a lot of comments from small business that it would be very burdensome" to recertify them every year.

With a Democratic takeover of the House of Representatives and the guarantee of at least a tie in the Senate, entrepreneurs and advocacy groups are largely mixed on the general outlook for the small-business economy in the years ahead.

What's certain is that small-business owners were keeping a very close eye on the election.

Nearly three-quarters of business owners said they believed the outcome would have a direct impact on the economic climate for small businesses nationwide, according to a pre-election survey by Wells Fargo and Gallup. More than 90 percent of those who owned their businesses for more than five years said they planned to vote.

At the top of their lists were issues such as health care, tax relief, and rising energy costs, according to a pre-election survey by American Express of more than 600 businesses nationwide that employed fewer than 100 workers.

Rep. Don Manzullo (R-Ill.), the now-outgoing chairman of the House Small Business Committee, charged that a Democrat-controlled Congress would roll back small-business tax cuts, SBA reform, affordable health-care options, and other recent Republican-led initiatives, replacing them with higher taxes and more regulations. "Our small employers -- the job creators of our economy -- would suffer mightily," Manzullo said in a statement ahead of Tuesday's vote.

As such, national small-business groups, including the National Federation of Independent Business, the U.S. Chamber of Commerce, and the National Small Business Association, had consistently ranked Republicans on the House Small Business Committee ahead of Democrats, Manzullo said.

Still, the NFIB, the nation's largest small-business lobby, with more than 600,000 members, said on Wednesday that most issues left the table that concern small businesses don't have a partisan label.

"While the composition of the Congress has changed, the obstacles that threaten small-business owners, employees, and their families have not," Todd Stottlemeyer, the CEO of the NFIB, said in a statement Wednesday. Stottlemeyer said the group supported "pro-small-business candidates in both parties, and small-business owners will now look to the Congress to get the job done."

In Tuesday's elections, Democrats gained 27 seats overall in the House, giving them 228 seats, compared to the Republicans' 196. Eleven seats remain undecided.

In the Senate, Democrats picked up five seats overall, giving them a slight edge, 50 to 49, and assured of at least a tie. The result is still undecided in a tight race in Virginia, where Democratic challenger James Webb leads incumbent Republican George Allen by a few thousand votes. The Senate has two independent members who vote with Democrats.

Democrats already seem poised to change course on small-business issues. For her part, Rep. Nydia Velazquez (D-N.Y.), the top Democrat on the soon-to-be Democrat-led Small Business Committee, has long slammed the Republican's record on small business, citing lackluster job growth and a soaring federal deficit, among other issues. She claims few small-business owners qualify for the top-level tax cuts Republicans often touted on the campaign trail.

Velazquez has also been a vocal critic of the Bush administration's record on awarding small-business contracts, which she claims are routinely miscoded and awarded to inappropriately large firms.

"Rising health-care and energy costs coupled with a decline in access to affordable capital has hampered the ability of entrepreneurs across the country to establish and expand successful enterprises," Velazquez said in a statement on Friday.

So was Tuesday's outcome good or bad news for the nation's estimated 25 million small businesses? We asked leading small-business advocates and entrepreneurs how they see the next few years shaping up.

From a small business perspective, what were the big wins and big losses in Tuesday election?

Karen Kerrigan, president of the Small Business and Entrepreneurship Council, a Washington-based advocacy group: In looking at some of the Democrats who are now new members of Congress, you have a good handful from business backgrounds and even small-business owners, and that's good news. One seat that was lost was Sue Kelly's (R-N.Y.). She was very much a pro-small-business member who was slated for the small-business committee, a former small-business owner who was knocked down.

Andrew Sherman, partner at Dickstein Shapiro, a Washington-based law firm focused on small-business issues: In general, I was disappointed in the under-emphasis on domestic issues and particularly those affecting small business. I wish someone would have talked about something other than Bush-bashing. Speaking from a small- and minority-owned business perspective, having the first woman speaker of the House is a big win.

Adam Lowry, co-founder of Method Products, a San Fancisco-based biodegradable cleaning products firm that ranked No. 7 on the 2006 Inc. 500 list: On the nation level, there were no real surprises. Voters are still voting on short-term issues instead of long-term issues. Here in California, there were many statewide bond issues, like a production tax on oil companies that would go towards funding alternative fuel sources. It doesn't look like that's going to happen now. At the same time, an income tax increase on corporations and small business owners did pass.

Lloyd Chapman, founder of the American Small Business League, a Petaluma, Calif-based small-business advocacy group: It turned out exactly like I thought it would. The big win is that pro-small business people are now in control of the House Small Business Committee and the Government Reform Committee. I suspect Nydia Velazquez is going to hold some real hearings on small-business issues, not the pep rallies Don Manzullo used to hold.

What are the issues affecting small businesses that are more likely to move ahead in the new Congress?

Kerrigan: A minimum-wage hike now seems like a foregone conclusion.

Sherman: There are a lot of cliffhangers still out there.

Lowry: I suspect global-warming issues are now going to be making their way into Congress like never before. Nothing is likely to get passed, but at the very least they will start to engage in a real discussion about the issue.

Chapman: I think for the first time in six years we're going start seeing members of the Bush administration forced to answer why so many large corporations, like Northrop Grumman and others, are being awarded small-business contracts. There are currently 13 federal investigations looking into the more than $50 billion a year in miscoded federal contracts. There's going to be a lot more oversight of the Small Business Administration and [SBA administrator] Steven Preston is going to be on the hot seat.

What issues are now dead in the water?

Kerrigan: The death-tax repeal is out, for the short term, anyway. Perhaps there will be a bipartisan approach, but it doesn't seem to be a priority.

Sherman: That fact that we may very well have deadlock between the House and Senate is a good-news, bad-news situation. It means a lot of bad legislation won't go ahead, but also that a lot of good legislation won't pass, either.

Lowry: The estate-tax repeal is going to fall flat. On health care, I'm pretty fearful that it's going to veer in a taxation issue.

Chapman: As far as I'm concerned, there were no real pro-small-business initiatives being advanced by Congress.

What's your general outlook for the small-business economy in the months ahead?

Kerrigan: It will be a challenging political environment, but that said, small-business owners have a strong track record on dealing with a bipartisan Congress.

Sherman: Overall, if I were a small-business owner, I'd want to wait and see how the dust settles.

Lowry: I'm pretty neutral about how it will affect the long-term growth of our company.

(CNSNews.com) - A Republican victory in the midterm elections Tuesday could spell disaster for small and minority-owned businesses, a group that lobbies for small business owners charged Friday.

"There is a growing body of evidence that the Bush administration would like to eliminate affirmative action and all federal programs that benefit small, minority-owned, women-owned, and disabled-veteran owned firms," said the American Small Business League (ASBL).

"If Republicans retain control of Congress next week millions of dollars in federal small business contracting opportunities could be in jeopardy," the group said in a release.

ASBL President Lloyd Chapman said minority business owners "need to realize that the Republican Party has always been anti-affirmative action and intends to eliminate all federal programs for small and minority-owned firms."

Chapman encouraged small business owners to vote for Democrats because "otherwise, federal small business contracting will be in serious jeopardy until the end of the Bush presidency."

Chad Moutray, a chief economist for the Small Business Administration (SBA), told Cybercast News Service that small businesses have actually benefited in recent years from tax cuts and a growing economy.

One cut that increased the capital spending tax exemption for small businesses has encouraged business owners to invest more capital, Moutray said.

"When the economy's doing well, small businesses are doing well also," he said, adding that "the economy right now is doing relatively well."

Moutray said the Internet has also helped fuel the boom in small businesses. "Technology has created an environment where people can open up a business with very little start-up costs."

Statistics from the SBA show that self-employment grew at a faster-than-average pace during the first three years of the Bush administration, the most recent years for which data is available.

Between 1979 and 2003, the economy gained more than 74,000 new self-employed minorities every year on average. From 2000 to 2003, that average increase rose to 145,000 new self-employed minorities every year.

Between 1992 and 2000, an average of 345,000 new small businesses entered the market each year. Between 2000 and 2004, the average was 807,000 new small businesses added every year.

In addition to overall small business growth, government loans to minority small businesses have also grown under the Bush administration and the Republican-controlled Congress.

The government granted $576 million in loans to minority-owned small businesses in 1990. The amount was up to $3.63 billion in 2000 and grew to $5.14 billion in 2004.

Chapman, who described himself as "a Republican from Austin, Texas," told Cybercast News Service he doesn't believe the statistics.

"Those statistics come from the government," Chapman said, adding that they "have turned out to be completely false and totally fabricated and that's based upon the investigations of the [Government Accountability Office], the SBA Office of Advocacy and the SBA Office of the Inspector General."

Calling Bush the "most anti-small business president in my lifetime," Chapman said the numbers are inflated by changing definitions of what makes a small business and by the war in Iraq.

"Unfortunately, I think war is good for the economy," he said. "When the government is dumping that much money into the war, you're putting a lot of money out there into the economy and ... when the government spends more money it creates more jobs."

Once upon a time Republicans could count on the support of small business owners, but that era may soon be over.

A key test of small business sentiment is shaping up in the Missouri Senate race where two small business advocacy groups are endorsing opposing candidates. Republican Sen. Jim Talent now trails Democratic state auditor Claire McCaskill by three points, a statistical dead heat, according to the latest Reuters/Zogby poll.

Lloyd Chapman, president and founder of the American Small Business League, issued a statement today urging small business owners to vote for McCaskill. "Stop listening to Republican pro-small business rhetoric. This party intends to eliminate the Small Business Administration and all federal small business programs," he said.