Understanding the 8(a) Business Development Program

There is a wide spread misconception that if you are a Small Disadvantaged Business (SDB) you are also considered to be an 8(a) Small Disadvantaged Business. First, there is no such designation as an 8(a) Small Disadvantaged Business and second, the SDB designation is now a “self certification” through your Central Contractor Registration. The SDB program was discontinued on October 1, 2008 and replaced with the self-certification process, as Brian’s earlier blog discussed.

The 8(a) designation is a Business Development Program that is maintain by the Small Business Administration (SBA). Briefly, the 8(a) Business Development Program consists of the following elements:

• A business assistance program for small disadvantaged businesses.
• An essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society.
• Participation in the program is divided into two phases over nine years: a four-year developmental stage and a five-year transition stage.

The following types of small businesses are eligible to apply to become part of the 8(a) Business Development Program:

• Veteran-owned
• Woman-owned
• Minority-owned
• Owned by a person with disabilities

But there are more detailed requirements than just being in one of the four categories listed above. To qualify for the program, a small business must be owned and controlled by a socially and economically disadvantaged individual. Under the Small Business Act, certain presumed groups include African Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and Subcontinent Asian Americans. Other individuals can be admitted to the program if they show through a "preponderance of the evidence" that they are disadvantaged because of race, ethnicity, gender, physical handicap, or residence in an environment isolated from the mainstream of American society.

In order to meet the economic disadvantage test, all individuals must have a net worth of less than $250,000, excluding the value of the business and personnel residence. Successful applicants must also meet applicable requirements

• Size standards for small business concerns;
• Be in business for at least two years;
• Display reasonable success potential; and
• Display good character.

The two-year requirement may be waived, but firms must continue to comply with various requirements while in the program.

Entry into the 8(a) Program

SBA requires that any business concern that desires to become part of the 8(a) Program make a formal application and submit required information. Each 8(a) Business Development (BD) applicant concern must submit required forms and attachments as designated by SBA when applying for admission to the 8(a) BD program. These forms and attachments will include, but not be limited to, financial statements, Federal personal and business tax returns, and personal history statements.

The documentation that you will provide will generally fall into two large areas that should demonstrate how you have been socially and economically disadvantaged.

Applying to the 8(a) Program

Prior to applying for the 8(a) Program, you are urged to take an on-line training and self-evaluation course, which is accessible via the 8(a) Business Development Suitability Tool: http://imedia.sba.gov/vd/media1/training/sbdtool/player.html

The first section of the on-line course explains the 8(a) Program in detail. It culminates in an eligibility self-assessment test. The test consists of a series of simple yes/no questions that evaluate the degree to which your firm meets the basic qualifications for the 8(a) Program. If you meet the basic eligibility criteria, you will be allowed to apply immediately for the 8(a) Program via the electronic on-line system. If key eligibility criteria are not met, you will be directed to the SBA resource deemed most appropriate to help you at this time

It is recommended that you submit your application or the 8(a) Business Development Program electronically, as it is much quicker process. If you would not like to submit electronically, you can contact your local SBA District office to obtain a paper application to apply to the 8(a) Program Business Development Program.