While government contracts can be a highly profitable venture, they can also be one of the most difficult businesses to get into. The government sets aside at least 5% of its federal contracting budget (which goes up to $5 billion a year) to small disadvantaged businesses. However, the complexity of the contracting process can be intimidating, which is why many small businesses shy away from the opportunity.
With the SBA 8(a) Business Development Program, businesses get the opportunity to strengthen their knowledge about government contracting. Aside from that, they also get a chance to work with experienced and established business owners in their respective industries.
Below, we’ll explain what SBA 8(a) programs are and who they’re for, along with the advantages they present on the table.
What is the SBA 8(a) Program?
The SBA 8(a) Business Development Program, or simply the SBA 8(a) Program, is a nine-year government-sponsored program that offers training, technical assistance, and government contracting opportunities to socially and economically disadvantaged small businesses. The goal is to help entrepreneurs compete effectively in the American economy.
The SBA defines socially disadvantaged businesses as those who have been “historically, subjected to racial or ethnic prejudice or cultural bias within the larger American culture.” This includes businesses owned by African Americans, Asian Pacific Americans, Native Americans, Hispanics, and others.
On the other hand, economically disadvantaged businesses refer to enterprises whose ability to compete in the free market has been “impaired” due to the lack of funding and credit opportunities compared to companies of similar nature who are not considered socially disadvantaged.
What are the Benefits of the SBA 8(a) Program?
The SBA 8(a) Program offers several advantages to participating small businesses. But the SBA has narrowed it down into four benefits, which we’ll outline below:
- Better odds of winning set-aside government contracts (contracts wherein only certain contractors can compete) or sole-sourced contracts (contracts issued to eligible businesses without competition).
- Work with experts that can help you navigate through the complex process of government contracting.
- Form joint-ventures with established businesses and owners, and learn from the best through the mentor-protégé program. However, it’s worth mentioning that the SBA’s mentor-protégé program also comes with its set of qualifications.
- Participate in SBA’s 7(j) Management and Technical Assistance Program.
SBA 8(a) Program Eligibility
Aside from meeting the definition of socially and economically disadvantaged business, applicants for the SBA 8(a) Program must also meet the following eligibility criteria:
- The business must meet SBA’s definition of a “small business”. You can check out SBA’s Size Standard Tool if you’re not sure whether your business qualifies or not.
- At least 51% of the business must be owned by a socially and economically disadvantaged individual and a U.S. Citizen. The business owner must be actively involved in managing the company’s day-to-day operations.
- The business must not have participated in the program before. It’s a one-time offer.
- Business owners must have a personal net worth of $250,000 or less, an adjusted gross income of no more than $250,000 in the past three years, and total assets of $4 million or less.
- The business must demonstrate a potential for success.
- Business owners applying for the program must not have a criminal record.
It’s also important to note that since the program also connects eligible businesses with industry experts through the Mentor-Protégé Program, they must also be aware of the eligibility requirements for the said program. This includes being a for-profit business and having a proposed mentor before applying for the program.
How to Apply for SBA 8(a) Program
If you think you’re eligible and ready to pursue government contracts, here are the steps in applying for the SBA 8(a) Program:
- Double-check your eligibility for the program by answering a few questions through SBA’s Am I Eligible? Tool.
- Create a profile on SAM.gov. You need to be logged in to your account when applying for the SBA 8(a) certification. You’ll also need to show your profile to government contractors to confirm that your business is in the SBA 8(a) Program.
- Once you’ve confirmed your eligibility and created your SAM.gov profile, you can start applying for the SBA 8(a) certification. The SBA has developed a comprehensive checklist of the documents you’ll need to submit to apply for the certification, so it might be worth checking out. You can also visit certify.sba.gov to access tools, training, and other information regarding the SBA 8(a) Program certification process.
- Submit the documents to the SBA either by mail or electronically. However, the SBA recommends that you submit your application online to expedite the process.
- After submitting the documents, the SBA will check the application for completeness, and you’ll be given two weeks to supply the additional documents. The SBA will then review your eligibility and reach a decision within 90 days.
The Bottom Line
The SBA not only offers contract financing to small government contractors, but they also offer educational materials to encourage small businesses to participate in government contracting. As long as your business falls into the definition of a socially and economically disadvantaged group, you’ll have better chances of qualifying for the program. If you think you qualify and you’re willing to put in the time and effort, it might be worth a try.