The federal government has long had a classification system for nearly everything, from apiarists to zinc miners, but content creators have until now occupied a sort of bureaucratic limbo — eligible for small business support in theory, yet lacking the paperwork to prove it.
That changed this month when the Small Business Administration announced that creator-led businesses would be classified under NAICS code 5121, Motion Picture and Video Industries. The designation recognizes what has become obvious to anyone who has watched a teenager unbox sneakers to an audience of four million: this is an industry now, not a hobby with delusions of grandeur.
"For over a decade, creators have shaped culture, commerce, and consumer behavior, yet have largely been treated as marketing expenses rather than businesses," said Daniel Abas, founder and president of the Creators Guild of America.
The classification does not technically unlock new benefits — creators who met program requirements were always eligible for S.B.A. support — but it does solve a practical problem that had bedeviled loan officers and applicants alike.
"They had no obvious industry code to put on the forms," said Lauren Lyster, vice president and head of social media at Go Fish Digital. "That left loan officers guessing at how to judge a business built on YouTube ad revenue, brand deals, and affiliate income."
Now, Ms. Lyster said, a creator could "hire an editor, rent a studio or build a product line without signing away equity or IP." The S.B.A. delivers roughly $45 billion in loans annually through the American banking system, and creators will have access to programs including microloans of up to $50,000 and the 7(a) loan program, which caps at $5 million.
Whether the classification changes the dynamics of brand negotiations remains an open question. Avi Gandhi, chairman of government advocacy for the Creators Guild, called such an effect "unlikely," though he suggested access to capital might allow creators to build businesses beyond the typical sponsorship deal — "consumer products, local restaurants and retail, and real-world services."
Shira Lazar, a creator and advocate, was more optimistic. "Having greater access to capital means creators may be less dependent on taking the next brand deal just to keep their business running," she said.
There are caveats. The S.B.A. is proposing an exception to size standards for the classification, since creator businesses tend to be remarkably small; that ruling will come after a public comment period closes on Nov. 20. And as Ms. Lyster noted, S.B.A. loans are still debt. A creator whose fortunes shift with a platform's algorithm could find themselves "stuck with real personal liability."
(The algorithm, as ever, giveth and taketh away.)
Kyle Hjelmeseth, chief executive of G&B Digital Management, urged measured expectations. "It's important to recognize that this is a relatively minor change rather than a sweeping shift," he said. "The bigger opportunity is what comes next."
Which is perhaps the most honest assessment of any government form: it is not the answer, but it is, at last, the right box to check.
Original story published in Digiday: "Creators are now classified as small businesses, but what does that actually mean?"