If you are like me you have heard many things regarding programs offered by the SBA. Trust me, I have been off and running many times in hot pursuit of the latest magical program for small business owners.
The result many times was the same. I found that the talk of these programs was not exactly the same as the reality of the SBA’s offerings. But the good news is I have found that there are many excellent program offerings by SBA to empower business owners.
One of my personal favorites is the SBA’s 8(a)Business Development Program.
What is The SBA 8(a) Business Development Program
I thought you might ask. The program is designed to provide support for entrepreneurs who are socially and economically disadvantaged in their efforts to fight for their slice of the American dream.
The program offers this support in numerous ways. Among them are: Mentoring, Business counseling, training, financial assistance, and the list goes on.
The 8(a) program is a nine-year program broken into two parts. The first four years focuses on business development and is followed by a five year transition period.
Participants in the 8(a) program are eligible to receive sole-source contracts. The limit for businesses providing goods and services is $4 million. For business participants in the manufacturing sector, this limit is $6 million.
8(a) firms are also allowed to collaborate in bidding on contracts. This improves the ability of these firms to acquire and perform larger prime contracts. An added benefit of this provision is participants are better protected against contract bundling.
The 8(a) program also has a Mentor-Protege Program that affords starting companies the opportunity to work with and learn from more experienced 8(a) businesses.
SBA 8(a) Business Development Program Goals And Requirements
Okay. Okay. We all knew there would be some fine print somewhere so let’s take a look.
The objective is to provide 8(a) participants with the tools to successfully compete in a competitive business environment. In pursuit of this goal, the 8(a) program has established some requirements.
- Participants must maintain a balance between there commercial and government business
- The monetary limit on sole-source contracts that a participant can be granted is $100 million or 5 times the company’s NAICS code value.
To assure that participants are on the right track the SBA monitors and assesses the performance of 8(a) firms through:
- Annual Reviews
- Business Planning
- Systematic Evaluations
To qualify for the SBA 8(a) Business Development Program a small business must be under the control of an individual that satisfy the SBA definition of disadvantaged persons.
The Small Business Act recognizes certain members of our society as socially disadvantaged: These individuals are usually among in a group that is generally classified as an ethnic minority in our country.
Any individual not part of these groups can become eligible for the 8(a) program if he or she can show through a “preponderance of evidence” that he or she indeed is socially disadvantaged.
This disadvantage can be due to racial or ethnic differences, physical handicap, gender or long-term residence in environments traditionally disallowed access to mainstream American society.
Additionally, to meet the burden of classification as economically disadvantaged an individual must submit a written account along with financial documentation pertaining to their individual financial situation.
In general, successful applicants also meet these requirements:
- The business must be eligible for small business classification.
- Businesses must demonstrate a high likelihood of success. This requirement is often times met by being 2 years old or older in business.
- Businesses must be owned and controlled by disadvantaged individuals who are United States citizens and have displayed good character.
And now if like myself, there is only one question left for you that matters.
How To Apply
Prior to beginning the application process, firms are encouraged to participate in their online course. This can be assessed by accessing the 8(a) Business Suitability Tool.
The course consists of an 8(a) program detailed explanation and an eligibility self-assessment. The test is a simple yes/no questionnaire to help potential participants to evaluate their firm’s basic requirements for the program.
Once ready to submit your application to the 8(a) business program electronic submission is suggested. But if choosing to use paper you can contact your SBA district office to request a hard copy of this application.
If you are looking for SBA 8a Certification help or a CPA based in Frederick MD, contact us today.