If there are 3 letters every small business owner should know, they’re S-B-A. The SBA, an acronym for the Small Business Administration, is a government agency designed to help small businesses. Most small business owners who come to us have heard of SBA loans, but the administration has a number of other stellar programs as well, including the SBA 8(a) Business Development program.
What is the SBA 8(a) Business Development Program?
The SBA 8(a) development program gives socially and economically disadvantaged business owners (and their small businesses) access to set-aside government contracts in the program, as well as other development opportunities designed to help strengthen these businesses. The program was designed to level the playing field for socially and economically disadvantaged small business owners.
How Long Does It Last?
8(a) certification lasts for a maximum of 9 years. Businesses need to complete annual reviews to maintain good standing in the program.
The program is only open to businesses and individuals who have not participated in the program before. Businesses may not participate more than once. If a business owner participated in the program with a previous business, the current business will not be eligible to participate in the 8(a) program.
SBA 8(a) Government Contracts
Big companies shouldn’t be the only entities awarded government contracts. You know that, we know that, and the SBA knows that. To give small businesses a fair shot, “the government limits the competition for certain contracts to small businesses.”
These contracts, known as “small business set-asides,” are divided into 2 subgroups: competitive and sole-source. Most contracts fall into the competitive category, which means that at least 2 small businesses could do the work or provide the product. If you don’t qualify for the 8(a) program, some competitive set-aside contracts are open to all small businesses, and participants in the 8(a) program are eligible to bid for these set-asides in addition to the set-asides just for 8(a) businesses.
Sole-source set-asides are awarded in instances when only a single business can deliver on the needs of the contract. Unlike competitive set-asides, sole-source set-asides are a type of contract that can be awarded without a bidding process.
Not sure how to navigate the federal contracting process? The 8(a) program gives you access to a Business Opportunity Specialist who can help you learn the ins and outs of the process.
The SBA’s mentor program facilitates joint ventures between 8(a) businesses and established businesses. It’s important to note that the SBA doesn’t pair 8(a) businesses with their mentors— the website reads, “This is not a matchmaking program”—so you have to bring your own mentor. But it does allow you to partner with an existing contractor to make your bid more appealing, and you still get to apply for contracts set aside for the 8(a) program.
If you need technical or management help, the 8(a) program offers resources like business training, counseling, marketing assistance, and high-level executive development. So they can help you round out pretty much any aspect of your business.
Business Owner Qualifications for the SBA 8(a) Program
For a small business to qualify for the 8(a) program, business owners must:
- Be US citizens who are economically and socially disadvantaged and also have at least 51% ownership and control of the business)
- Have a personal net worth of $250,000 or less
- Have an average adjusted gross income for 3 years of $250,000 or less
- Have assets worth $4 million or less
- Manage day-to-day operations
- Make long-term decisions for the business
- Be new to the 8(a) program
Small Business Qualifications for the SBA 8(a) Program
In addition to the business owner qualifications, the business must meet the following criteria:
- Must qualify as a small business for government contracting purposes
- Be new to the 8(a) program
- All principals “demonstrate good character”
- Demonstrate the potential to succeed and fulfill government contracts
Find Out If You Qualify
Curious to see if you’d qualify but not ready to take the leap yet? You can get a preliminary assessment at the SBA’s Certify website, where you can see if you’re likely to qualify for 3 different SBA programs. In addition to the 8(a) program, you can also get a sense if your business is eligible for the Women-Owned Small Business (WOSB) Federal Contract Program or the Historically Underutilized Business Zone (HUBZone) Program.
It’s quick and easy. The questionnaire is only 15 questions and can be completed in as little as 15 minutes. They even include helpful bullet points of necessary information next to each question, if you are uncertain about how to answer. Once the questionnaire is completed, SBA Certify will give you a preliminary indication of whether you qualify. If the result is that you may not be eligible, they even give you a quick explanation as to why. How’s that for helpful?
Getting Certified as an 8(a) Small Business
To participate in the program, you need to start by getting your small business certified. Here’s how:
- You need a profile in the System for Award Management (SAM). You’ll need to create a user account and then register your small business as an entity in the system.
- Apply for 8(a) business certification through the SBA.
- You will be notified about the decision on your application by mail.
- Once you have been accepted into the program, update your SAM profile to show contracting officers that your business is in the 8(a) program.
- Your profile will be updated in Dynamic Small Business Search, a database of small businesses registered in SAM, to show your certification (including approval date and exit date from the program).