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 intention of the (8(a) Program is to support small businesses with business development; procurement assistance; business counseling; financial assistance; surety bonding; and other management and technical assistance resources. The (8(a) Program seeks to position small companies to compete 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. An SBA representative can answer 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.
Fulfilling the requirements of the Program are easily understood. The applicant firm needs to be a small business and must be owned and controlled by a member of an economically or socially disadvantaged group. The controlling owners of the entity must be of good character and be able to exhibit potential for success. The owners must also be citizens of the United States.
A small business is defined by the Small Business Administration 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 SBA 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.
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.
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 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.
Find out more about programs for growing your business. Check out Michael Saunders’ Websites on Government Grants for Small Business and Best Homebased Small Business Ideas.