If businesspeople who have appeared before the Pennsylvania House of Representatives Finance Committee have their way, the state's definition of a small business may change.

The committee was in Pittsburgh yesterday to hear testimony from the business community on tax credits designed to encourage research and development. A portion of those credits has been set aside for small businesses since their creation in 1997. But speakers said the definition of what constitutes a small business prevents them from making full use of the credits by eliminating businesses that would otherwise qualify.

The state defines a small business as one having assets no more than $5 million. With inventory and equipment, a company could easily exceed that figure and still be considered small according to commonly used measures such as revenue or number of employees.

Sean Rollman, chief financial officer of Plextronics, told the committee, "Revenues are a truer reflection of a company's increasing growth."

Noting that small businesses claimed only $6.8 million of an available $8 million in set-aside credits, Brian Kennedy, vice president of government relations for the Pittsburgh Technology Council, called on the committee to "create a definition that will enable use of the full $8 million." For example, he said, a small business might be defined as one that employs no more than 500.

Committee chair David K. Ledvansky (D-Forward) said that based on testimony from yesterday's hearing, together with an earlier hearing in Montgomery County, the committee will work with the state's Department of Community and Economic Development and the Department of Revenue to redefine small business to make more businesses eligible for the set-asides.

Rep. Ledvansky is sponsoring legislation that would increase the total available tax credits for all businesses from $40 million to $75 million, a figure proposed when the credit was renewed in 2006. Last year, 439 companies applied for $94.7 million credits.

The credits are calculated based on the increase in a company's research and development expenses, compared to its historical expenses. Small businesses can receive a credit of 20 percent; for other businesses, it is 10 percent.