February 1, 2012
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The Small Business Administration, which is dedicated to supporting entrepreneurs and their ventures, has specific incentives offered through its 8(a) Business Development Program, aimed at boosting small businesses that are socially or economically disadvantaged.
What does it take to qualify for this program and what can it mean for a small business?
According to the SBA, the first qualification is for the owner or owners of the small business to be part of what the government considers a socially disadvantaged group. The list includes African-Americans, Native-Americans and Hispanic-Americans.
The second qualification is that the company be a disadvantaged business. But the government's definition of disadvantaged may be different from a business owner's definition.
"Disadvantaged doesn't mean destitute," said Ann Liisa Van Mantgem, account executive with Government Certification Specialists, a company that helps businesses apply for SBA 8(a) status. "It means that you had hurdles and obstacles that have drained the growth and success of your company. But you're still fighting and you're still in the game."
The SBA is looking for companies and owners that are strong and have continuing potential to reap the benefits of 8(a) status.
What Does 8(a) Status Provide?
The focus of the 8(a) Business Development Program is to provide small businesses with nine years of:
- Mentoring
- Procurement assistance
- Business counseling
- Training
- Financial assistance
- Surety bonding
- Other management and technical assistance
But the single most attractive aspect of getting 8(a) qualified is the access to government contracts. Most anything a small business owner is selling can be sold to the federal government. But having 8(a) status gives an entrepreneur access to something called full-force set-aside contracts.
Those kinds of contracts can be awarded to 8(a) businesses without offering it up to any competition and competitors can't protest once they have been awarded.
"You go in, you establish a relationship with a customer and if they like you they can order from you," said Van Mantgem. "It's way faster than competing on the open market."
Companies that are 8(a) certified can go after contracts worth up to $4 million in goods and services or $6.5 million worth of manufacturing, according to SBA guidelines.
There is also a mentoring option available for companies who qualify for 8(a). Smaller companies can pair with larger companies to go after contracts bigger than they can handle on their own. The partnership can also enable smaller companies to learn about procuring federal contracts from companies with experience.
How to Qualify
Like any government program there is a list of qualifications to meet before becoming 8(a) certified. The business must meet the size standard for a small business, show potential for success and be owned by U.S. citizens who meet the social and economic guidelines. Business owners also have to meet financial guidelines and submit a personal narrative.
The SBA says it prefers that applications are submitted online, but it will accept paper copies. The process can take months and the SBA can request additional documents and ask for clarification along the way.
"We tell people to think about the application process as due diligence, where the government is scrutinizing the owners, the company and the financial stability," said Van Mantgem. "While the paperwork can be a pain the payoff at the end is amazing."
The SBA 8(a) Business Development Program can offer a big boost to small businesses and the entrepreneurs that run them. Being 8(a) certified gives a company access to federal government contracts that can be won without ever going to bid. In addition to contract accessibility, the program also offers mentoring and business development training. For business owners who meet the social and economic criteria, taking the time to become an 8(a) business can open the door to future growth and expansion.
Carla Turchetti is a veteran print and broadcast journalist who likes to break a topic down and keep her copy tight. That's why this bio is so brief! Carla blogs via Contently.com.
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