One common misconception is that if your business qualifies as a small disadvantaged business (SDB), it also qualifies as an 8(a) small disadvantaged business. An 8(a) Small Disadvantaged Business is no longer a designation, and the SDB designation is now a "self certification" through your Central Contractor Registration. On October 1, 2008, the self-certification procedure took the role of the SDB program.
The Small Business Administration oversees the 8(a) classification, a program for business development (SBA). The 8(a) Business Development Program is made up of the following components, in brief:
A small business aid initiative for underprivileged enterprises.
An crucial tool for assisting socially and economically marginalized business owners to integrate into American society's economic mainstream.
The program is divided into two sections that participants must complete over the course of nine years: a four-year developmental stage and a five-year transition stage.
Small enterprises in the following categories are eligible to apply to join the 8(a) Business Development Program:
Veteran-owned
Woman-owned
Minority-owned
Owned by a disabled individual
However, the requirements go beyond simply falling into one of the four categories mentioned above. A small business must be owned and operated by a socially and economically disadvantaged person in order to be eligible for the program. African Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and Subcontinent Asian Americans are among the presumptive groups under the Small Business Act. Other people may be accepted into the program if they can demonstrate, by a "preponderance of the evidence," that their color, ethnicity, gender, physical disability, or place of residence places them at a disadvantage relative to others in American society.
All persons must have a net worth of less than $250,000, excluding the value of the business and personnel dwelling, in order to pass the economic disadvantage test. Successful candidates will also need to comply with any regulations:
Guidelines for small company enterprises' size;
Be in operation for at least two years; show a reasonable chance of success; and
Be a person of character.
However, businesses must continue to adhere to certain rules while participating in the program. The two-year restriction may be lifted.
Participation in the 8(a) Program
Any company concern that wants to join the 8(a) Business Program must submit a formal application and the necessary documentation, according to SBA requirements. When applying for admission to the 8(a) Business Development (BD) program, each 8(a) applicant concern is required to submit the necessary paperwork and attachments as specified by SBA. Financial statements, federal tax returns for both individuals and businesses, and personal history declarations are just a few examples of the papers and attachments that will be required.
The evidence you will present will typically fall into two categories that together should show how you have experienced social and economic disadvantage.
Applying for an 8(a) Program application
You are strongly advised to complete the online training and self-evaluation course offered by the 8(a) Business Development Suitability Tool before submitting an application to the program at http://imedia.sba.gov/vd/media1/training/sbdtool/player.html.
The 8(a) Business Program is thoroughly explained in the first section of the online course. An eligibility self-assessment test serves as its climax. The test comprises of a series of straightforward yes-or-no questions that assess how well your company satisfies the requirements for the 8(a) Program. If the basic eligibility requirements are met, you will be able to apply for the 8(a) Business Program right away via the electronic online system. You will be directed to the SBA resource judged most appropriate to assist you at this time if important qualifying requirements are not met.
Is your company sufficiently small to qualify as an 8(a) Participant?
Only businesses that fall under the size criteria for their major NAICS codes and are classified as small are eligible for the 8(a) Business Program. And keep in mind that the SBA will take into account not only the size of your company but also the size of any affiliates. The SBA may even go so far as to ask for a formal size assessment if there is any doubt about the size of your business throughout the 8(a) application process.
What is the main NAICS code you use? The SBA may object if the NAICS number you choose doesn't seem to be the one in which your firm appears to do the most business, even though businesses have some discretion to choose the code that fits best. It would be helpful to understand 13 C.F.R. 121.107, the SBA's definition of "principal industry," before submitting an application.
Don't forget that the SBA now calculates average yearly receipts using the five-year lookback period following the full implementation of the Runway Extension Act.
Conclusion
It is advised that you submit your 8(a) Business Development Program application electronically because it is a considerably faster procedure. If you choose not to submit electronically, you can get a paper application for the 8(a) Business Program Business Development Program by contacting your local SBA District office.
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