SBA Rule Change Threatens Jobs, Small Companies

ALEXANDRIA, VA – The Textile Rental Services Association (TRSA) yesterday expressed strong opposition to a Small Business Administration (SBA) proposed rule that would change the criteria used to define a small business from the average annual receipts to number of employees.

"TRSA’s principle disagreement centers on using employment levels to determine small business size eligibility," said Roger Cocivera, TRSA president and CEO. " By establishing an employee ceiling of 200 for the definition of a small business, the SBA’s proposed rule sends the message ‘automate—get rid of people.’”

Textile rental companies are defined as small businesses now if annual receipts over a three-year period total less than $12 million per year. If the definition of 200 employees were used instead of annual receipts, companies that made more efficient use of technology would be favored because they have fewer workers. This in turn would encourage companies to replace jobs with automation, Cocivera said.

TRSA encouraged the SBA to increase the revenue figures used to calculate small business eligibility rather than using employee figures, and to maintain the three-year- average method of calculation, rather than a 12-month calculation method, as the rule change proposes.

“This rule change is detrimental to textile rental companies,” Cocivera said. “A seasonal workload fluctuation could unduly influence the company’s eligibility for SBA loans and contracts, pushing it over the defined limit of workers.”

By using the 12-month calculation method, bumps in hiring due to military service, such as those that are now taking place during the war with Iraq, could push a company over the small-business definition limit. Employers who keep soldiers in the National Guard and the Reserves on the payroll, but have to hire part-time workers or temporary workers to do their work while they are serving their country, would be penalized by the new rule. Likewise, because of the way employees are counted, any time a company hires a worker, even temporarily, it inflates the count.

“TRSA’s efforts on behalf of small textile rental companies provide a valuable service in explaining just how detrimental this rule change would be,” said Leonard Reino of Reino Linen Service, one of the largest employers in Gibsonburg, OH. “Under the proposed rules, I might not have been able to qualify for the SBA loan that I received a few years ago, which allowed me to grow the company and employ more people.”

The Textile Rental Services Association of America (TRSA) is a national trade association representing over 1,100 company locations across the nation.  Since 1913, TRSA members have provided textile maintenance and rental services to commercial, industrial and institutional accounts-over 90 percent of TRSA member companies are small businesses.  TRSA members serve hygienically clean textile and dust control items to millions of customers in commerce, industry, and other professions, from automobile service to manufacturing, restaurants and hospitals.  The textile rental industry generates yearly sales of roughly $11 billion. U.S. linen supply and industrial laundering companies employ more than 110,000 people.