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New SBA Rule Expands HUBZone Opportunities for Small Businesses, will assist in Revitalization of Local Communities

Release Date: 
Thursday, December 5, 2019
Release Number: 
20-11
Contact: 
Matthew.Coleman@sba.gov

The U.S. Small Business Administration has issued a new rule that will implement changes to the Historically Underutilized Business Zone (HUBZone) program, making the federal initiative more attractive to small businesses. The new rule will encourage small businesses to invest in HUBZone communities and hire residents of HUBZones.

The HUBZone program is a place-based contracting assistance program whose primary objective is job creation and increasing capital investment in distressed communities.  There are more than 800 designated HUBZones located throughout the New York District Office service area, encompassing Long Island, New York City and the Lower Hudson Valley.  A HUBZone map is also available on the SBA website for individuals to use in order to determine if they live or work in/near a designated HUBZone.

The new rule change will also make it easier for federal contracting officers to identify and work with HUBZone-certified small businesses.  It comes after a previous direct final rule issuance in mid-November that allows state governors to seek HUBZone designation for certain rural and suburban areas.

“Thanks to the SBA’s action, HUBZone firms will see a reduction in regulatory burdens due to this change. The new rules also help agencies by eliminating ambiguities and, most importantly, make it easier for HUBZone firms to understand and comply with program requirements,” said SBA Atlantic Regional Administrator Steve Bulger who oversees the federal agency’s operations in New York, New Jersey, Puerto Rico and the U.S. Virgin Islands.

The idea behind these rule changes is the encouragement of the SBA HUBZone program to incentivize and reward companies that invest in local communities designated as HUBZones. 

Key changes to the HUBZone program resulting from this include:

  • An individual will continue to be treated as a HUBZone resident if that individual worked for the firm and resided in a HUBZone at the time the concern was certified or recertified as a HUBZone, even if the area where the individual lives no longer qualifies as a HUBZone or the individual has moved to a non-HUBZone area;
  • Certification of HUBZone firms will be required only on an annual basis, meaning such concerns will no longer be required to expressly qualify as a HUBZone at the time of each offer for a HUBZone contract and award;
  • For compliance purposes, HUBZone firms must maintain at least 20% HUBZone residents as employees when performing on HUBZone contracts, or the SBA will propose the firm for decertification.  HUBZone firms have an affirmative duty to notify the SBA if they fall below the 20% attempt to maintain the standard; and
  • When a company buys an office in a HUBZone or enters into a long-term, 10-year lease for such office space, indenting the space to be its principal office, the concern will be able to meet the principal office HUBZone criterion for a period of at least 10 years, even if at some point the property is purchased or leased, the office location no longer qualifies as a HUBZone.

“Changes to the SBA HUBZone program are here and I encourage small businesses to prepare by learning how the rule changes will impact your business goals before they take effect at the end of the month,” said SBA New York District Director Beth Goldberg, who leads the nation’s largest SBA field office.

This rule is published in the Federal Register and effective December 26, 2019. 

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About the U.S. Small Business Administration

The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.