Increase Your Business with the Federal Government with the SBA 8(a) Program

The Small Business Administration 8(a) Program was initiated through the Small Business Act to assist disadvantaged small businesses to more effectively compete in the marketplace. The program helps these companies to access both private and government procurement opportunities.

The focus of the program is to provide business development support, such as mentoring, procurement assistance, business counseling, training, financial assistance, surety bonding and other management and technical assistance. The goal, however, is to prepare small disadvantaged firms for procurement and other business opportunities.

Contact the SBA district office serving your local area to begin the process toward participating in the Program. Representatives of the Small Business Administration can answer most general questions over the telephone. Some Small Business Administration district offices offer 8(a) orientation workshops to provide additional information regarding the eligibility requirements and to review various SBA forms.

The basic requirements for an 8(a) applicant are straightforward. The applicant firm must be a small business, be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States, and must demonstrate potential for success.

The Small Business Administration defines a small business concern as one that is independently owned and operated, is organized for profit, 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 twelve months or on sales volume averaged over a three-year period. Standard North American Industry Classification System codes are used by the Federal Government to identify and classify specific categories of business activity that represent the primary line of business of a firm. SBA size standards are based on these NAICS codes.

Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as members of a group. Social disadvantage must stem from circumstances beyond their control. In the absence of evidence to the contrary, individuals who are members of the specific designated groups are presumed to be socially disadvantaged.

Individuals that are not members of a designated group can claim social disadvantage on the basis of a “preponderance of evidence.” Generally, preponderance is evidence of quality and quantity which leads the decision maker to conclude, objectively, that the existence or truth of the fact(s) asserted is more probable than not. This evidence must include at least one objective distinguishing feature that has contributed to social disadvantage, such as race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged.

Lack of access to capital and credit opportunities is one of the key factors in gauging if one is economically disadvantaged. When coupled with social disadvantage it is a measure of how effectively one can compete in the free enterprise system.

Usually the applicant firm must have been operational for at least two full years as evidenced by business income tax returns for each of the two previous tax years which show operating revenues in the primary industry in which the applicant firm is seeking 8(a) program certification.

Participants in the Program receive assistance in two stages. The first stage is the development stage and the second is the transition stage. The SBA provides business development assistance in the first stage of participation in the Program. The focus of the development stage is to assist the firm in overcoming its economic disadvantage and usually lasts for four years. The transition stage is designed to help participants overcome the remaining elements of economic disadvantage and to prepare participants for leaving the Program. The second stage of the program last for five years.