The Small Business Administration, or 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 SBA 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 SBA to assist socially and economically disadvantaged small business owners win government contracts. Eligible candidates include business owners with certain racial, ethnic, gender and military-service backgrounds. In 2021 alone, 610 businesses were approved for the SBA 8(a) program.
The goal of the SBA 8(a) program 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. This is different from other SBA loan programs, which aim to help small businesses receive funding for their current goals.
How big of an opportunity does this program present to small business owners? For 2020, 8(a) small businesses were awarded $34 billion in federal contracts, according to the Congressional Research Service.
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 SBA 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
- Have a personal net worth of $750,000 or less, adjusted gross income of $350,000 or less and assets totaling $6 million or less
- Ensure all principals of the business demonstrate good character
- Demonstrate a potential for long-term success (e.g., having been in business for a couple years)
- Firm or owners must not have been debarred or suspended by any federal entity
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 SBA 8(a) Certification?
If your business matches the criteria, there are many reasons why it might be beneficial to become SBA 8(a) certified.
The biggest potential benefit is the government actually sets aside certain contracts for SBA 8(a) small businesses to bid on exclusively.
There are several 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 sets aside contracts of $150,000 or less for small businesses. Some contracts are open to any small business, while others are exclusive to members of those certified in the SBA 8(a) small business program.
Sole-Source Set-Aside Contracts
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 for 8(a) small businesses can be worth up to $7.5 million for manufacturing projects and $4.5 million for other acquisitions.
Additionally, the SBA notes: “Entity-owned 8(a) program participants are eligible for sole-source contracts above these thresholds, but the Department of Defense requires approval of a formal justification if the 8(a) sole-source contract exceeds $100 million; all other federal agencies require approval for sole-source 8(a) contract actions that exceed $25 million.”
Other SBA 8(a) Certification Benefits
While access to contracts is the biggest advantage of SBA 8(a) certification, there are other reasons to apply.
Program benefits include:
- Business opportunity specialist to help you navigate the federal contracting process
- Potential to form joint ventures with mentor businesses in the Mentor-Protégé program
- Training in business advisement, marketing advisement and executive development
- Ability to receive federal surplus property on a priority basis
How to Get SBA 8(a) Certification
Applying for SBA 8(a) certification is fairly simple. Follow these 5 steps.
1. Set Up a Business Profile
First, set up a free business profile at the System for Award Management (SAM) website, which is managed by the General Services Administration.
2. Register Your Business
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.
3. Set Up an SBA 8(a) Certification Account
The next step for how to get 8(a) certification is to visit the SBA certification page. There you’ll 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.
4. Complete Your SBA 8(a) Application
After you’ve created your accounts, you can follow the instructions on the SBA’s website to complete the free SBA 8(a) application online.
5. Undergo Annual Review to Maintain 8(a) Certification
Once a business becomes SBA 8(a) certified, its certification lasts for a maximum of 9 years.
Businesses must undergo an annual review to maintain certification. Refer to this annual review checklist from the SBA to prepare.
After the 9 years are up, the business can no longer qualify or be admitted to the SBA 8(a) program in the future.
How Long Does It Take to Get SBA 8(a) Certified?
Generally, SBA 8(a) program 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 your application is found to be incomplete, the SBA will notify you via certify.sba.gov.
If your 8(a) certification is approved, your SAM profile will show your approval and exit date from the program.
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 a leg up over competitors, but it is up to you to make sure you’re actively bidding and staying on top of any opportunities that become available.
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 use it correctly.
To be successful in the SBA 8(a) Business Development program, follow these tips:
Gain Experience With Government Projects
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.
Apply for 8(a) Certification as Soon as Possible
When you’re ready, apply as soon as you can. If you think 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 benefits.
Follow All the Guidelines
Remember that even after 8(a) certification, your small business will be scrutinized annually to ensure continued good standing. If anything changes year-to-year that makes you ineligible for the SBA 8(a) Business Development program, 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 in the SBA 8(a) certification program 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.
Now that you know what the SBA 8(a) program is all about and how to apply, be sure to assess your knowledge of the federal contract process before submitting your business for consideration. Also evaluate your business’s current and future goals. Doing so will ensure you get the most out of your enrollment.
If you’re ready, submit your SBA 8(a) program application today and leverage the opportunity to win more government contracts. Also, benefit from a business mentorship, powerful joint ventures and high-level training for you and your team through the agency’s Business Development program.