In order to
qualify for access to the 8(a) or SDB program, a company must
qualify as a small business with potential for success that is owned and controlled by individuals
who are socially and economically disadvantaged. The
owners of the company must submit an application to the SBA
which details how the company meets these criteria. Here
are a few tips on meeting the SBA's requirements.
1. Small Business To
qualify as a small business, a company must compare its status
with other companies operating in the same (or similar) line of
business. The U.S. Department of Commerce maintains a
regulatory matrix for use in determining if a company qualifies
as a small business. Visit our page entitled, "What
is a Small Business?" to find out more. 2.
Social Disadvantage Social
disadvantage refers to any circumstances under which the owners
of a company have faced racial, ethnic or cultural bias within
the U.S. to the detriment of their ability to establish or grow
their business. Clear examples of social disadvantage
include race- and gender-based discrimination, as well as
discrimination on the basis of physical disability or lack of
access to traditional education. The
government has determined that a presumption of social
disadvantage applies to certain racial and ethnic minorities
including African Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent Asian Americans, and Native Americans.
Other applicants, including non-minority female, veteran, and disabled
business owners, must affirmatively demonstrate social
disadvantage by a preponderance of the evidence. 3.
Economic Disadvantage Economic
disadvantage is measured in terms of the personal income,
personal net worth, and fair market value of all assets owned by
each individual claiming social disadvantage in an application
for 8(a) or SDB certification. In calculating personal net
worth, the SBA excludes an individual's ownership interest in
the company, as well as any equity held in a primary personal
residence. An individual's net worth must be less than
$250,000 to be eligible for the 8(a) program, or less than
$750,000 to be eligible for the SDB program. 4.
Ownership and Control The
ownership and control of a company are critical eligibility
factors. Owners applying to the 8(a) and/or SDB program
must demonstrate not only unencumbered ownership
of at least 51% of the value of the company, but also that they have full control of the company's day to day operations.
The SBA looks into a range of matters in assessing a company's
ownership and control. 5.
Potential for Success The
SBA also looks into whether a company can demonstrate that it has reasonable prospects for success
in competing in the private sector if admitted to the 8(a) BD program. In determining potential for success, the SBA considers a range of issues including the
company's length of time in business, its financial capacity and level of access to
capital and credit, its past performance and profitability, and the technical and managerial experience of its managers.
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