Understanding The 8a Certification For Small Business
There are many certifications that can greatly benefit small businesses
, such as: WBE, DBE, MBE, HUBZone and more. Yet, one of the least understood and most often misunderstood certifications is the SBA 8a certification. The SBA's 8a BD Program, named for a section of the Small Business Act, is a business development program created to help small disadvantaged businesses compete in the American economy and access the federal procurement market.
In order to qualify for the SBA 8a Certification the business 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
- 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. Examples of SBA general size standards include the following:
- Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured
- Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided
- Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided
- Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided
- General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction
- Special Trade Construction: Annual receipts may not exceed $7 million; and
- Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product
The SBA defines socially disadvantaged individuals as 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 following designated groups are presumed to be socially disadvantaged:
- Black Americans
- Hispanic Americans
- Native Americans (American Indians, Eskimos, Aleuts, and Native Hawaiians)
- Asian Pacific Americans (persons with origins from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, U.S. Trust Territory of the Pacific Islands [Republic of Palau], Commonwealth of the Northern Mariana Islands, Laos, Cambodia [Kampuchea], Taiwan; Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Republic of the Marshall Islands, Federated States of Micronesia, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru; Subcontinent Asian Americans (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal), and ,members of other groups designated by the SBA.
The SBA defines economically disadvantaged as socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities. An economically disadvantaged individual's net worth, after excluding the individual's equity in the firm and the equity in the primary residence, may not exceed $250,000. SBA will also consider the individual's average two-year income, fair market value of all assets, access to credit and capital, and the financial condition of the applicant firm in evaluating economic disadvantage.
In order to be eligible for the 8a certification the SBA requires that at least 51% of the applicant firm is directly and unconditionally owned by socially and economically disadvantaged individuals.
The SBA considers the business' potential for success requirement based on the following:
- the technical and managerial experience of the applicant firm's managers
- the firm's operating history
- ability of the firm to access credit and capital
- the firm's financial capacity
- the firm's record of performance
- whether the applicant firm or individuals employed by the firm hold the requisite licenses if the firm is engaged in an industry requiring professional licensing
Also the small business must have been operational for at least two full years as evidenced by business income tax returns for each of the two previous tax years which show operating revenues in the primary industry in which the applicant firm is seeking 8a certification.
By having a better understanding of the 8a certification, its benefits, and requirements you should be able to determine if your small business would qualify for this extremely beneficial certification. If you don not qualify, there are still many options available for small disadvantaged businesses. Some of these include getting a MBE certification, DBE certification or getting certified as a women owned business. Regardless of which certification/s your small business qualifies for, any and each certification will prove to be a valuable asset for years to come.
by: Aaron Kowalski
Simple Rules On Giving Corporate Gifts To Your Employees How To Find Quality Yet Inexpensive Business Cards Create Your Own Business Opportunity With Planet Antares Inc. The Shifting Trends Of The Toy Business Online Business Ideas And How To Make Them Work Online Business And Lsi Keywords Types Of Signs For Your Business How To Trademark Your Business Name, Slogan Or Logo Trademark A Slogan To Protect Your Company From Business Theft Reasons For A Small Business To Have A Binding Machine Starting Your Business With A Dropship Directory Spiral Binding Your Business Presentation Avant Business – We Are Avant