THE SBA 8(a) PROGRAM
The 8(a) program name is from Section 8(a) of the Small Business Act. The Act, as amended by Congress, created the 8(a) program so the U.S. Small Business Administration (SBA) could help small companies owned and operated by socially and economically disadvantaged persons develop their businesses.
One of the business development tools of the 8(a) program is the award of Federal contracts. Under the program, SBA acts as a prime contractor and enters into contracts with other Federal Government departments and agencies. In its role as a prime contractor, SBA awards subcontracts for their performance by certified companies.
How to Apply to the 8(a) Program
The first step in seeking certification with the 8(a) program is to contact the local SBA district office serving your area. An SBA representative will answer general questions over the telephone and set up an appointment with you to go over the various application forms.
The following forms and documentation are required to be submitted for an eligibility determination:SBA Form 1010A, 8(a) Personal Eligibility Statement
Preparing the 8(a) application package
You do not need to pay anyone to prepare your 8(a) application. SBA designed the application forms so the applicant can complete the application. However, a consultant can assist in completing the application. Please be advised that no one can guarantee that an application for 8(a) program participation will be approved. The application process is intended to assure that each applicant receives a fair, unbiased review, free from favoritism and influence. Any irregularities in the application review process should be immediately referred to the SBA Inspector General.
Definition of Socially and Economically Disadvantaged Individuals
Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identities as members of groups without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control.
In the absence of evidence to the contrary, the following individuals are presumed to be socially disadvantaged:Black Americans;
And members of other groups designated from time to time by the SBA.
In addition, an individual who is not a member of one of the above-named groups may apply for 8(a) certification. However, the applicant must establish social disadvantage on the basis of clear and convincing evidence.
Economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities, as compared to others in the same or similar line of business and competitive market area who are
not socially disadvantaged. For purposes of program entry, an individual whose personal net worth (excluding the equity in their personal residence and business) exceeds $250,000 will not be considered economically disadvantaged.
A woman-owned business may be recognized as a "socially disadvantaged firm" if the owner is a member of one of the groups for which social disadvantage is presumed. If the woman is not a member of one of the groups for which social disadvantage is presumed, she must establish her individual disadvantage on the basis of clear and convincing evidence that she has suffered discriminatory treatment because of her gender and that this treatment has impeded her entry into or advancement in the business world. SBA will consider any pertinent evidence but will give particular attention to evidence of discriminatory practices suffered in the areas of education, employment and the business world.
SBA's Definition of a Small Business
SBA defines a small business as one that is independently owned and operated and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding 12-months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:
Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured.
Wholesale: Maximum number of employees may not exceed 100.
Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided.
Retail: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided.
General & Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction.
Special Trade Construction: Annual receipts may not exceed $7 million.
Agriculture: Annual receipts may not exceed $0.5 to $5.0 million, depending on the agricultural product.
Years in Business
You normally have to be in business for two years in order to be eligible for the 8(a) program. However, a waiver of the two-year rule may be granted if a company meets certain criteria. The waiver criteria are:the individual(s) upon whom eligibility is to be based must have substantial and demonstrated business management experience;
the applicant must have or be able to demonstrate the ability to obtain the personnel, facilities, equipment and any other requirements needed to perform the contract.
A newly certified firm is not eligible for 8(a) contracts until it submits and receives SBA approval for its business plan. After the firm has an approved plan, the length of time before the first 8(a) contract is awarded will vary based on the success of the firm's marketing efforts. While SBA will make every effort to assist a firm with its marketing efforts, the 8(a) program is a self-marketing program and SBA cannot guarantee 8(a) contract awards.
The Business Plan Requirement.
Promptly after certification, a program participant must submit a business plan which must be approved by a SBA Business Opportunity Specialist (BOS) prior to the program participant being eligible for 8(a) program benefits. The submitted plan must include the following data:-An analysis of market potential.
In addition, each program participant must annually review its currently approved business plan with its SBA BOS and forecast its needs for contract awards under section 8(a) for the next program year.