Do you know about the 8(a) certification program? Are you aware that acquiring one can grant you benefits from the Small Business Administration (SBA)? This blog will walk you through the salient features of the 8(a) program, its benefits, and how to get an 8(a) certification for your eligible business.
The federal government runs many programs to assist small business owners who might encounter racial or cultural bias in their businesses. These programs are designed to ensure equitable opportunities for businesses, regardless of their background or ethnicity. The United States Small Business Administration’s SBA 8(a) Business Development Program is one of these initiatives, intending to assist small, minority-owned businesses in getting their share of federal contracts. The program’s objective is to support such 8(a)-eligible firms to thrive in a competitive business environment.
The 8(a) certification is designed for companies owned and managed by socially and economically disadvantaged individuals, who must own at least 51% of the organization. The SBA recognizes African-Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and Subcontinent Asian Americans as socially and economically disadvantaged. However, if an individual does not belong to any of these groups but is still considered disadvantaged due to factors such as race or ethnicity, gender, physical disability, or long-term isolation from mainstream American society, they may be eligible for the program. This nine-year initiative provides small businesses with training in business management, marketing strategies, counseling services, and technical support throughout their enrollment period. The first four years of the program focus on development, while the remaining five years concentrate on transitioning into a successful enterprise. If you are a minority small business owner looking to obtain an SBA 8(a) certification, then this could be of interest to you.
This blog explains the steps you can follow to acquire an 8(a) certification.
Step 1 – Meet Eligibility Requirements
Before you apply for an 8(a) certification with the Small Business Administration (SBA), you need to check whether or not you fulfill the requirements laid out by SBA. The basic requirements for being eligible for an 8(a) are:
- U.S Citizenship: The first eligibility requirement for being accepted in an 8(a) program is to be a U.S. citizen by birth or naturalization
- Small Business: 8(a) Business Development Program is primarily for small businesses. The SBA has defined some criteria to deem a business as a small business. The definition of a small business varies from industry to industry, and you can check your company’s eligibility on the agency’s website. The SBA has identified employee strength and revenue as the metrics for qualifying businesses as small businesses
- No Previous Participation: The SBA only accepts companies that have never participated in the program before
- Ownership: You need at least 51% ownership or control of the business to apply for an 8(a)
- Income: To qualify, your net worth must not exceed $850,000, your adjusted gross income should be no more than $400,000, and the total value of your assets cannot surpass $6.5 million.
Step 2 – Gather Supporting Documents
To complete the application process, you need to organize the supporting documents after meeting all the eligibility requirements. You must actively seek to support your position with valid and credible documents. The SBA reviews every document and can reject the application if it finds any discrepancy between the documents.
Some of the documents that should be readily available include personal and business financial statements, federal tax returns, bank statements, a firm’s balance sheet, profit and loss statements, lease agreements, a list of federal/non-federal and private sector contracts, state filings, governing documents, etc.
You may want to seek help from SBA or speak to an experienced 8(a) certification consultant if you have questions about attaining the supporting documents.
Because the SBA states that just 25% of 8(a) applications are successful, it is critical to understand how and why the SBA uses each of the documents included in the application.
Step 3 – Register your Business
SBA requires business owners to register their business in the System for Award Management (SAM), which indicates that they either have a Tax Identification Number (TIN) or Employer Identification Number (EIN) to pay taxes. Registration for SAM requires a business owner to have a Data Universal Numbering System (DUNS) number, which will identify your business when applying for federal grants. Once your SAM registration is complete, you can log into the SBAs website and begin the application process.
You can follow the below-mentioned steps to register in SAM:
- Visit sam.gov and click “Create an Account” on the top right to create an individual account
- Your Unique Entity ID (UEI) is assigned when you register in SAM.gov, located on your entity registration record
- After you have provided your details, it will be reviewed and approved in SAM before you can proceed with applying to Certify. It may take up to 72 hours for the approval process to be completed.
Step 4 – Write a Narrative
Your social narrative must demonstrate that your business entry is unconditionally owned and controlled by one or more socially and economically diverse groups of people who are good and morally upright citizens of the United States and who can demonstrate the potential for a successful business to meet the eligibility requirements for the 8(a) Programme and to have access to the 8(a) Programme.
The SBA has requirements and guidelines that applicants must meet to be eligible for the 8(a) Programme. You can contest the assumption that you are socially disadvantaged. You must create a narrative that demonstrates the following if you are not one of the group members who are assumed to be disadvantaged:
- There is at least one distinguishing feature that has contributed to your Social Disadvantage
- You have gone through a considerable and persistent social disadvantage in the United States of America because of that distinguishing feature
- The Social disadvantage has made it difficult for you to enter or advance in the corporate sector and explore your business options
Step 5 – Apply to the Program
Once you have met the eligibility criteria, written a narrative, and gathered all the supporting documentation, you can complete the program application process. You have two ways to apply:
- Submit the online application through the Small Business Administration (SBA) website
- Complete a physical application, which can be done through a local SBA district office
SBA charges no fee for the application to the 8(a) program. Once the SBA receives the application, they review your submission within 90 days and decide about your acceptance to the program. The acceptance to the program is formally communicated through an email or a mailed letter.
Step 6 – Meet with an SBA Representative
Once you receive acceptance into the program, you must arrange a meeting with a nearby SBA representative and obtain official certification as an 8(a) business owner. The SBA has numerous district offices throughout the country, so visit their website to locate one in your area. Before attending your appointment with the representative, ensure you acquire a 1010c form from the SBA, which will serve as your formalized 8(a) business plan. This document contains various inquiries that can assist you in determining your objectives for participating in this initiative. Your assigned SBA representative will guide you through completing this form.
If you are facing difficulties with an 8(a) certification and come from an economically disadvantaged background, we can provide technical assistance to help guide you through the process. Our team at iQuasar is equipped to assist you with the business development requirements for the 8(a) program, ensuring your requirements are met.