The American Rental Association (ARA) submitted comments to the Small Business Administration (SBA) last week, encouraging the SBA to change the current small business size standards for several subcategories in the North American Industrial Classification System (NAICS).

The SBA had called for comments on its November 2011 proposal to increase small business size standards for those businesses operating under NAICS codes 532490, Commercial & Industrial Equipment Rental & Leasing, and 532412, Construction, Mining & Forestry, Machinery & Equipment Rental & Leasing, from $7 million to $30 million in annual revenues. ARA supported that these changes, as well as standards under 532310, General Rental Centers, also be raised from $7 million to $30 million.

ARA contends that these increases would allow rental companies to more fully participate in small business set asides and to take advantage of other SBA loans and programs.

“ARA is pleased to be able to submit a comment on these rules and hopes the SBA will consider our request to raise the small business size standards to $30 million. This will allow more ARA members to take advantage of the programs and products offered by the SBA. It also allows more member businesses to potentially take part in small business sets asides that other government contractors are required to seek under the terms of their contract. It’s a win-win for all our members,” said John McClelland, ARA's vice president for government affairs.

Under the current size standards, contractors, who have low initial capital costs and continuing financial requirements, have size standards of $33.5 million to qualify under SBA while those from whom they rent equipment have a $7 million threshold.

ARA contends that it is inconsistent that the size standards for construction companies range from twice to more than four times the size standard for equipment rental companies when they require essentially identical capital as a base for their businesses.

“A backhoe is a backhoe, no matter who owns it,” McClelland said. “Large or small, those in the equipment rental industry have similar business models and parity is needed between all those companies. It’s fundamentally unfair that contractors with $30 million in revenues cannot contract with a similarly sized rental company under current SBA regulations.”

This limit increase coincides with ARA’s efforts to gain more recognition of the benefits of renting equipment versus leasing/purchase options for government agencies and contractors.

“Allowing more ARA members to take advantage of government purchasing just makes sense. As local, state and federal agencies seek to save money and do more with less, rental is there, providing viable, affordable, environmentally sound options,” McClelland said.