The 8(a) Program — named for Section 8(a) of the Small Business Act ” is a business development program created to help small disadvantaged businesses compete in the market place. It is also designed to assist such companies in gaining access to federal and private procurement markets.
The Program provides business consulting services to owners of firms from disadvantaged groups. This support takes the form of procurement assistance; business counseling; financial assistance; surety bonding; and other management and technical assistance resources. The (8(a) Program to positions these small entities to compete effectively for procurement and other business opportunities.
The best way to start the process toward participating in the Program is by contacting the local SBA district office serving your area. A Small Business Administration representative can answer general questions over the telephone. Some SBA district offices offer 8(a) orientation workshops to provide additional information regarding the eligibility requirements and to review various SBA forms.
Understanding what is required to participate in the Program is relatively straightforward. Any company that applies must be categorized as a small business that is owned and controlled by a member of an economically or socially disadvantaged group. The owners of the entity must have exemplary character and be able to demonstrate the potential for success. The owners must also be citizens of the United States.
A small business is defined by the SBA as an entity that is organized for profit and independently owned and operated. The firm also must not be dominant in its field. Characteristics such as number of employees and sales volume, usually averaged over a three year period are dependent upon the industry in which the company operates. The basic reference used by the Small Business Administration is the Standard North American Industry Classification System (NAICS) which is used by the Federal Government to classify specific business activities that delineate the primary business of the company.
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.
The government defines persons as economically disadvantaged if they are members of a socially disadvantaged group whose ability to compete effectively in the capitalistic system due to lack of access to capital and credit opportunities.
A two year operating history is usually the minimum to apply for certification under the 8(a) program. Tax returns showing operating revenues for at least two years in the business area that the firm is applying are required to meet this requirement.
Participants in the Program receive assistance in two stages. The first stage is the development stage and the second is the transition stage. The Small Business Administration provides business development assistance in the first stage of participation in the 8(a) 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 8(a) program. The second stage of the program last for five years.