The 8(a) Business Development Program is a business assistance program for small disadvantaged businesses. The 8(a) Program offers a broad scope of assistance to firms that are owned and controlled at 51% by socially and economically disadvantaged individuals. Participants can receive sole source contracts up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing.
8(a) firms also can form joint ventures and teamd to bid on contracts. This enhances the ability of 8(a) firms to perform larger prime contracts and overcome the effects of contract bundling, the combining of two or more contracts together into one larger contract.
Benefits of a Minority Owned Small Business Certification 8(a):
- As an 8(a) certified business this allows you yo be visible to contracting officers as a small business and Minority certified, so the field for set-aside contracts is smaller, which maximizes your ability to received no bid contract under $25,000.
- Shows your company has “lasting potential” in the industry and financial stability.
- This certification last for 9 years. You do not have to re-apply or pay for it annually.
- It is proof that you are in good financial standing with the federal government (no federal debt) which is appealing to contracting officers.
- 5% of all federal monetary spending is mandated to be allocated to Minority Owned Small Business certificate holders.
Separate eligibility requirements exist for a business that American Indians, Native Alaskans, Native Hawaiians and/or Certified Development Companies own.
Before SBA can approve an 8(a) Business Development program application, the disadvantaged individual(s) also must show/prove how he/she is socially disadvantaged. To prove this, the individual(s) owners must ultimately show that such personal experiences had a negative impact on entry into or advancement in the business world.
Under federal law, socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identification as members of groups without regard to their qualities.
According to the SBA, for purposes of the 8(a) Business Development program, the following individuals are presumed socially disadvantaged (called presumed groups):
- Black Americans
- Hispanic Americans
- Native Americans
- Asian Pacific Americans
- Subcontinent Asian Americans
In the Absence of evidence to the contrary, an individual applicant is presumed socially disadvantaged if:
- He/She holds themselves out to be a member of a presumed group
- He/She is currently identified by others as a member of a presumed group
An individual who is not a member of one of the “presumed groups” can be admitted into the 8(a) Business Development program. The business must prove to the SBA that the individual(s) meeting SBA’s ownership and control requirements is/are socially disadvantaged. The individual(s) must show personal experiences where the applicable in education, employment and business history. The individual must also provide evidence to SBA proving one’s social disadvantage.
- Are you socially disadvantaged? Hispanic, Asian, African American or Native American? Or Can you prove discrimination on basis of gender, disability, veteran status, race or culture?
- Personal net worth under $250,000 (excluding personal residence and business) cash, checking/savings accounts, real estate, IRA’s, stocks, bonds and vehicles.
- Annual salary must be the highest paid person in the company with reasonable salary to industry and the company.
- Total current market value of all asset must be under $4 million
- Average 2 year adjusted gross income under $200,000
- Must be a Small Business according to the SBA standards
- Must have full control of the company
- Must own 51% of the company
- Must provide 2 most recent tax returns