Forbusinesses, it pays – both literally and figuratively – to be small. Commercialenterprises deemed by the Small BusinessAdministration to be "small" qualify for government loans and other preferentialtreatment. Meanwhile, the public loves "small" business and abhors"big" business.

A 2013 Gallup poll showedthat small business trailed only the military in public confidence, with 65percent of survey participants expressing either a "great deal" or"quite a lot of confidence." Big business scored a combined 22percent in the two categories. Banks, which got their own category, earned a 26percent confidence rating. If you're wondering, organized labor scored 20percent.

No wonderbusinesses want to be labeled as small. It really is a small world after all.Next month, the Small Business Administration will apply some Disney-like magicand reclassify 8,500 businesses as"small," a move that has left some smaller businesses,as well as other critics, a little bit grumpy. But the debate over the properdefinition of "small business" dodges a more important question.Exactly what is it that Americans like so much about small businesses?Policy-makers should answer that question first, and then determine the bestway to encourage those traits.

Manypeople associate small business with friendly neighborhood shops where personalservice is abundant and long lines scarce. What's not to like? Truth is that'sa hard business model to sustain because lack of lines equals lack of revenue.Many of these smallest businesses do need help to survive. That help can comein the form of SBA assistance or in the form of accommodating local governmentsthat resist the urge to load small businesses down with paperwork and straintheir thin profit margins with unnecessary taxes.

Withtechnology simultaneously eliminating jobs and reducing the cost of starting abusiness, very small businesses also occupy an increasingly important economicniche. One way to get a job is to create your own. To many, an SBA loan is animportant part of that process.

Buteconomically the impact of the stereotypical mom-and-pop small business isovershadowed by the types of businesses that will benefit from the SBAreclassification. Some of these businesses are family-owned manufacturers orsmall retail chains. Others are entrepreneurial companieswith the goal of becoming a big business – even if that makes them lesspopular. They are the job creators of the 21^st century economy,especially in a state such as Oregon with relatively few large multinationalcorporations.

The SBAsays the reclassifications, the first systemwide size adjustments since 2008,are needed to account for inflation. Thanks in part to the Great Recession,inflation has been tame since 2008. And there's room to quibble with some ofthe SBA's revisions. But the agency takes the right general approach byacknowledging that the definition of small requires context.

Aircraftmanufacturers can employ up to 1,500 and still be classified as small. In theaerospace industry that definition doesn't feel unrealistic. But a1,500-employee florist shop would be huge. In recognition of the obviousdifferences between retailers and manufacturers, the SBA classifies retailersby sales instead of employees. (The cutoff to be considered a small florist is$7 million in annual revenue.) The agency's list of categories and sizestandards takes 46 pages to explain.

To add tothe confusion, the SBA is not the only government agency attempting to definesmall business. Obamacare, for example, offers exemptions to "small"businesses using different criteria than those offered by the SBA. The OregonLegislature waded into the swamp of small business definitions in 2013 when itadjusted the tax code for some small businesses as part of the "grandbargain" during a special session. Some legislators still argue that the bill's definition of"small" includes too many "big" businesses.

The SBAshould look for ways to simplify its guidelines rather than just adjustexisting categories for inflation. But anyone who wants a healthy economyshould cheer both types of small businesses: the personable mom-and-pop and thesometimes brash entrepreneurial growth company with hundreds of employees.

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