Small businesses take their size seriously.

So when the U.S. Small Business Administration proposed redefining what constitutes a small business earlier this year, the plan set off a wave of protest. Even when the agency announced in July that it was halting those plans, that drew protests, too. The reactions underscored just how coveted the status of small business can be.

The debate revved up Monday, when the American Small Business League, a 2-year-old group in suburban San Francisco, accused the SBA of being an advocate for large corporations. The group has taken aim at the SBA's decision not to drop the employee cap for a nonmanufacturing small-business designation to 100 employees from 500, where it has stood for years. Other caps vary according to industry.

" To keep the size standard at 500 benefits a very small number of super small businesses," said the group's president, Lloyd Chapman. "It's damaging to the 23 million small businesses with less than 100 employees."

An SBA spokesman said the agency decided against the changes because of overwhelming opposition to them. Spokesman Michael Stamler stressed that the SBA "is still working on the size standard."

At stake are the billions of dollars in goods and services the federal government buys from those it has certified as small businesses. The government sets aside 23 percent of such contracts for small enterprises.
The SBA currently uses 37 categories to determine if a business is small. It wanted to slash that number to 10, using the number of employees as an indicator of a company's size rather than a combination of head counts and receipts as the current system does.

In its proposal, published in the Federal Register in March, the agency maintained that the number of employees is a more stable indicator of a company's size than receipts.

Rep. Nydia Velazquez (D-Brooklyn), the ranking member of the House Small Business Committee, opposed the changes.

" If SBA went ahead and adopted the new regulations, we would have shrunk the number of small businesses eligible to participate in government assistance programs in terms of federal contracts and business loans," she said.

Under the proposed changes, any restaurant with more than 50 employees would have been designated a big business, she said. "That covers most [restaurants] in New York City," she said.

Local business owners, however, are split on the SBA's decision to abandon the changes.

Edward Fred, president of CPI Aerostructures in Edgewood, said dropping the employee cap to 100 could be devastating for his business, a manufacturer of replacement parts for military aircraft. His company employs 66 employees and has $30 million in revenue, all from government contracts.

If we grew to 101 employees, "we couldn't compete in a small arena," he said, "and all of a sudden we're competing against Lockheed."
On the other hand, Lina Gottesman, president of Altus Metal and Marble Services, which restores the fronts of buildings and has offices in St. James and Manhattan, wants the classification changed.

" I think it would take some of the big guys out that are getting an advantage that shouldn't be getting the advantage," she said.