The SBA 8(a) Business Development program offers a unique and valuable opportunity for small businesses in the U.S.
Benefits of the program include reduced competition for government contracts — including access to sole-source contracts — and entry into the All Small Mentor-Protégé program.
If your small business qualifies, the SBA 8(a) program can be a great way to build your revenue and take your company to the next level.
What Is the SBA 8(a) Business Development Program?
The 8(a) Business Development program is an initiative by the Small Business Administration (SBA) to assist socially and economically challenged small business owners win government contracts. Eligible candidates include business owners with certain racial, ethnic, gender and military-service backgrounds.
The 8(a) program isn’t related to any other SBA loan programs, which aim to help small businesses receive funding for their current goals. Instead, the SBA’s goal is to develop “firms that will go on to thrive in a competitive business environment.”
In other words, the SBA aims to set businesses up for continued success, even after they’re out of the program.
How big of an opportunity does this present to small business owners? For 2017, 3,421 8(a) businesses were awarded more than $27.1 billion in federal contracts.
While there are many SBA 8(a) certification benefits, a business must qualify to be certified.
Who Qualifies for SBA 8(a) Certification?
To become an 8(a)-certified business, there are certain requirements you must fulfill.
Business seeking to become 8(a) certified must:
- Operate as a for-profit entity
- Qualify as a small business under SBA criteria
- Not be a former participant in the SBA 8(a) program
- Be at least 51% owned by economically and socially disadvantaged U.S. citizens.
- Not be owned by someone with a net worth of more than $250,000
- Not be owned by someone with an average personal adjusted gross income exceeding $250,000 over the previous 3 years
- Not have personal assets exceeding $4 million
- Have an active owner controlling daily operations and long-term business decisions
- Ensure all principals of the business demonstrate good character
- Demonstrate a potential for long-term success, including completing contracts
You can check your eligibility for SBA 8(a) certification by stepping through an online question-and-answer section managed by the SBA.
What Are the Benefits of Having SBA 8(a) Certification?
If your business matches the criteria, there are many reasons why it might be beneficial to apply for the program.
The biggest potential benefit is the government actually sets aside certain contracts for members of the SBA 8(a) program to bid on exclusively.
There are 2 ways this happens and, depending on the situation, it could mean you have little or no competition for lucrative government contracts that can sustain future success.
Competitive Set-Aside Contracts
Generally, the government will set a contract aside for small businesses if it is under $150,000. Some contracts are open to any small business, while others are exclusive to members of those certified in the small business 8(a) program.
As a member of the 8(a) small business program, certain contracts may be set aside for your business if you’re the only one that can fulfill them. This means that there is no competitive bidding process, leaving your company free to take it on at will.
Sole-source contracts can be worth up to $4 million for goods and services and $6.5 million for manufacturing projects.
While access to contracts is the biggest advantage of certification, there are other reasons to apply.
Other program benefits include:
- A business opportunity specialist to help you navigate the federal contracting process
- Potential to form joint ventures with mentor businesses in the Mentor-Protégé program
- Business advisement, marketing advisement and executive-development training
How to Get SBA 8(a) Certification
Applying for SBA 8(a) certification is simple. First, set up a free business profile at the Systems for Award Management (SAM) website, which is managed by the General Services Administration.
Once set up, you’ll register to conduct business with the U.S. government. You’ll need your Data Universal Numbering System (DUNS) number, employer identification number (EIN) and NAICS code to complete this step.
Next, you can visit the SBA certification page, where you can set up an account as a first-time user. You’ll be asked to enter certain information about your business, so be sure to have business and personal financial documents — tax forms, profit-and-loss statements, bank statements, etc. — as well as a business plan and other basics on hand.
After you’ve created your accounts, you can follow the instructions on the SBA’s website to complete the free SBA’s 8(a) application online.
Once a business becomes 8(a) certified, its certification lasts for a maximum of 9 years. Businesses must undergo an annual review to maintain certification. After the 9 years is up, that business can no longer qualify or be admitted to the SBA 8(a) program again in the future.
How Long Does It Take to Get 8(a) Certified?
Generally, 8(a) applications are processed within 90 days. The time it takes depends on the backlog of applicants and can be delayed if you submit either incomplete or incorrectly filled-out forms.
If no other documentation is necessary, you’ll soon receive approval or rejection in the mail by the SBA’s Division of Program Certification and Eligibility.
If you’re approved, the next step is to backtrack to the SAM website to update your profile to reflect your SBA 8(a) certification. This lets contracting officials know that your business is eligible to bid through the program.
After you’re enrolled, you’ll have to work to stay in the program. The SBA conducts annual reviews, which require you to show adherence to the eligibility requirements to remain in good standing.
Does SBA 8(a) Certification Guarantee Work With the Federal Government?
While the 8(a) program makes it easier for small businesses to win government contracts, enrollment in the SBA 8(a) program doesn’t guarantee that your business will obtain government contracts. It’s simply a tool to obtain future work by allowing your business to be included in a limited pool of socially and economically disadvantaged businesses.
As an 8(a) certified business, you’ll have advantages over competitors, but nothing will be handed to you. Make sure you’re actively bidding and staying on top of any opportunities that become available.
5 Tips for Business Owners Interested in the SBA 8(a) Business Development Program
While it’s easy to apply for the SBA 8(a) program and certification offers many benefits, the program only works if you utilize it correctly.
To be successful in the SBA 8(a) Business Development program, follow these tips:
- Before you apply, make sure you have experience with government projects. The federal contracting process is complex. It can take months or years to master the system. Since your enrollment in the SBA 8(a) Business Development program is limited to a 9-year period, you don’t want to waste that time learning the basics.
- When you’re ready, apply as soon as you can. If you think that your business can qualify for the SBA 8(a) certification, go ahead and try. If you’re unsure, consult with your regional office to see if you may qualify. The approval process takes several months, so the sooner you apply, the sooner your small business can reap the many benefits.
- Follow all the guidelines. Remember that even after certification, your small business will be scrutinized annually to ensure continued good standing in the SBA 8(a) Business Development program. If anything changes year-to-year that makes you ineligible, you’ll be removed and lose all benefits.
- Inform your team. Get everyone in your small business on board with what you’re trying to achieve through SBA 8(a) certification. Your success means everyone’s success. Certification with the 8(a) program and obtaining government contracts can be great morale boosters and motivators for employees.
- Assign an SBA 8(a) monitor. Just because you run the daily operations doesn’t mean you shouldn’t have a little help. If possible, charge a trusted member of your team with monitoring your status. This will help alleviate worry when it comes time for your annual review.
Is the SBA 8(a) Program Right for You?
Because enrollment is limited to 9 years, it’s crucial to make sure it’s the right time to apply. The chance of securing government contracts is alluring, but it will mean nothing if you don’t have the experience to capitalize on the opportunity.
Assess your knowledge of the federal contract process as well as your business’s current and future goals before applying. Doing so ensures you get the most out of your enrollment.
If you’re ready, apply now for SBA 8(a) certification and leverage the opportunity to win more government contracts, acquire a business mentor, form powerful joint ventures and receive high-level training for you and your team through the Business Development program.