8(a) certification Requirements: A Greater Chance for Small Business

The Small Business Association (SBA) of America awards the 8(a) certification, which is a diverse ownership certification. Businesses which are at least 51% owned and run by people who are considered to be economically or socially disadvantaged by the SBA are eligible for certification. 

Businesses that are 8(a) certified are immediately joined in the SBA Business Development program and have exposure to government agreements...

8(a) Certification Package

The following are the essential qualifications for SBA 8(a) participants:

Socially Marginalized

To be qualified to participate in the SBA 8(a) program, you must be an American of Asian, Hispanic, Native, or African descent, or you must have suffered long-term, persistent bias against you because of your gender, handicap, veteran status, culture, racism, or another criterion. If you are a member of an un presumed group, you must demonstrate to the Small Business Administration the bias and discrimination you have experienced in American Business Administration.

No one's wealth should exceed $750,000. Personal finances and assets shouldn't exceed $6,000,000.

This sum includes all of your cash, savings and current accounts, shares, investment property, vehicles, bonds, recreational vehicles, motorbikes, and other valuables. Your house, IRAs, business, and 401(k) are all valued according to your private finance statement, but these are not included in the calculation of your net worth.

Yearly Wage

An 8(a) candidate should be the most highly paid employee in the company, but his yearly compensation should not be too expensive for the sector and must be appropriate relative to the company's annual gross income.

Total assets' market value

An 8(a) applicant's total market worth of their assets should not exceed $4 million for 8(a) certification requirements.

Standard 3-year AGI

The aggregate 3-year AGI of the applicant as shown on his federal income tax returns should not be greater than $250,000.

Citizenship

By submitting a passport, certificate of birth, and other official papers, the applicant must demonstrate his or her citizenship in the United States.

Size of the company

The business should be smaller in terms of either gross revenue or employee count.

Control

The firm's current activities and deliberate judgment should be completely under the direction of an individual who is socially and economically challenged with 8(a) certification requirements. The most senior position in the company should go to this person.

Ownership

One or more financially and socially challenged persons should own the firm. The owner (or owners) have to own at least 51% of the company. Being an Alaska Native Corporation or an Indian tribe or a Community Development Corporation, or a Native-Hawaiian Organization would be advantageous.

Contract execution

The firm requesting 8(a) certification has to have a strong track record of contract performance, along with at least one from the previous year, as well as a strong client/project portfolio.

Age of the Company

Many 8(a) applicants believe that SBA only takes into account businesses with a minimum two-year history. This is untrue, though. The firm must be at least two years old, as demonstrated by two or more years' worth of tax returns that indicate earnings, to qualify for an SBA 8(a) application. However, businesses that can demonstrate to the SBA that they have the resources, expertise, and volume of contracts necessary to thrive in the 8(a) program will have the opportunity to be admitted early into the program before spending two complete years in operation.

Possibility of success

The SBA always seeks out businesses with full-time, dedicated owners who are technically proficient and have expertise running a business and are stable, established, financially solid, and well-documented.

What Advantages Do SBA 8(a) Certifications Offer?

There are several reasons why it can be advantageous for your company, if it meets the requirements, to obtain SBA 8(a) certification.

The largest advantage is that the government specifically reserves some contracts for SBA 8(a) small companies to compete on.

This may happen in several ways, and depending on the circumstances, it can imply that you have little to no competition for big government contracts that will support your future success.

Contracts for Competitive Set-Aside

Contracts for $150,000 or less are often reserved by the government for small firms. While some contracts are available to all small businesses, some are only available to participants in the SBA 8(a) small company program.

Contracts for Sole-Source Set-Aside

Certain contracts may be reserved for your company as a participant in the 8(a) small business program if you are the only one who can complete them. It follows that your business may accept it at any time because there was no open competition for the job. For manufacturing projects, sole-source contracts for 8(a) small firms with 8(a) certification requirements can be worth up to $7.5 million and $4.5 million for other purchases.

Furthermore, the SBA states that "entity-owned 8(a) program participants are eligible for sole-source contracts beyond these levels; however, the Department of Defense needs the approval of a written reason if the 8(a) sole-source contract surpasses $100 million; all other federal agencies want clearance for sole-source 8(a) contract actions that exceed $25 million."

Other Advantages of SBA 8(a) Certification

While access to contracts is the most obvious benefit of SBA 8(a) certification, there are several more reasons to apply.

Benefits of the program include: 

• A business opportunity specialist to assist you in navigating the federal contracting process;
• The ability to form joint ventures with advisor businesses in the Mentor-Protégé program;
• Training in business advice, marketing advice, and executive development;
• The ability to receive federal huge excess property on a priority basis.