How to Meet the Criteria as an 8(a) Socially and Economically Disadvantaged Business

8a

A business owner that controls 51% of his or her business can be considered ‘socially disadvantaged’ if they have been subject to racial/ethnic prejudice or cultural bias within our American society.

8aThe business owner’s identity has be associated as a member of a particular group or deemed disadvantaged from circumstances beyond the businesses owner’s control. In order to qualify for the 8(a) Program, you must show a distinguishing feature that could contribute your business to being socially disadvantaged. Specific groups of Americans that would be considered socially disadvantaged by ethnicity would be African Americans, Hispanic Americans, Native Americans, and certain Asian Americans. A big misconception about the 8(a) Program is that you don’t have to be considered a minority just based on ethnicity in order to meet the criteria of the program. As long as the business owner demonstrates his or her social disadvantage to the federal government when registering, their business can be approved for 8(a).

 

Qualifying you business as an 8(a) economically disadvantaged business is all based on personal income and total assets. The SBA (Small Business Administration) states according to the 8(a) Business Development Program Regulations that a business’s Adjusted Net Worth must not exceed $250,000 for initial eligibility or $750,000 for continuing eligibility. A business owner’s Personal Income must not exceed $250,000 (averaged over three years) for initial eligibility or $350,000 for continuing eligibility. Your personal income taxes are allowed to be filed with your spouse, but the federal government will exclude your spouse’s income from the overall calculation.  Financial evidence such as a W-2 will need to be required to prove to the government who has been responsible for the income.   Assets such as jewelry and electronics are to be included in a business owner’s Total Assets. Total Assets must not exceed $4 million for initial eligibility and $6 million for continued eligibility allowing for growth during the business’s 9-year term.

8(a) applications are reviewed by the federal government and the intricacy of the application will determine the length of time that it will be reviewed. The maximum time frame as stated by the SBA is 90 days to process, which makes filling out the 8(a) application so important to a small business on a time frame. Most of the time when the small business owner fills out their 8(a) eligibly registration it is still deemed insufficient and isn’t approved by the federal government. Third party registration firms such as US Federal Contractor Registration provides case mangers that perform step-by-step accreditation to make sure your business gets approved for 8(a) and is prepared to starting the bidding process.

 

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1 Comment

  1. It is good to know that to be an 8a small business is based on personal income and total assets. If they Adjusted net worth is more than $250,000 it could mean you aren’t allowed to have an 8a business disadvantage anymore. I’ll have to pass this along to any small business owners in our town.


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