Section 8(a) of the Small Business Act established a program to provide small businesses run by members of socially or economically disadvantaged groups to compete more effectively for market opportunities. The program provides business development assistance to accepted firms to compete for procurement opportunities in the private and federal marketplaces.
The intention of the 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 SBA Program 8(a) seeks to position small companies to compete for procurement and other business opportunities.
The best way to start the process toward participating in the 8(a) Program is by contacting the local SBA district office serving your area. An SBA 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.
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 SBA 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.
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.
Program certification usually requires that a business be in operation for at least two years. The latest two years tax returns demonstrating operating revenue are sufficient to fulfill this requirement.
The Program is divided into two stages. The first stage is the development stage which is usually four years in duration. It is designed to help Program participants overcome economic disadvantage by providing business development assistance. The second stage is the transitional stage which usually lasts five years. This stage is designed to help participants overcome the remaining elements of economic disadvantage and to prepare participants for leaving the Program.
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