The SBA 8(a) Business Development Program offers a unique and valuable opportunity for small businesses.
Attractive benefits of the program include reduced competition for government contracts—including access to sole-source contracts— and entry into the Mentor-Protégé Program.
Read on to learn how the program can benefit your small business, see if you qualify and find out how to apply today.
What Is the SBA 8(a) Business Development Program?
The 8(a) Business Development Program is an initiative by the Small Business Administration to assist socially– and economically-challenged owners and entities in winning government contracts. Eligible candidates include business owners with certain racial, ethnic, gender and military-service backgrounds.
It isn’t related to any of their loan programs, which aim to help small businesses receive funding for their current goals. Instead, the SBA claims the goal is to “graduate 8(a) firms that will go on to thrive in a competitive business environment.” In other words, they want to set businesses up for continued success, years after they’re out of the program.
How big of an opportunity does this present to small business owners? Consider these numbers: In FY2017, 3,421 8(a) firms were awarded more than $27.1 billion in federal contracts.
To be considered for the SBA 8(a) Business Development Program, your business must qualify for certification.
Who Qualifies for SBA 8(a) Certification?
Like the SBA loan programs, there are certain requirements your business must hit before consideration.
- Operate for-profit
- Qualify as a small business under government criteria. Check your status here
- Not be a former participant in the SBA 8(a) program
- Be at least 51 percent owned by economically- and socially-disadvantaged U.S. citizens.
- Not have a personal net worth exceeding $250,000
- Not have average personal adjusted gross income exceeding $250,000 over 3 years
- Not have personal assets exceeding $4 million
- Be 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
Check your eligibility for SBA 8(a) certification by stepping through an online Q and A managed by the Small Business Administration.
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 how the government will actually “set-aside” certain contracts for members of the SBA 8(a) program. There are two 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 the 8(a) program.
As a member, 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.
Other than being certified for the program itself, all you’ll have to do to become eligible for sole-source contracts is register with the System for Award Management (SAM).
Sole-source contracts can be worth up to $4 million for goods and services and $6.5 million for manufacturing projects.
While the contracts are the biggest advantage of certification, there are still 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 SAM website, which is managed by the General Services Administration. There, you’ll register to conduct business with the U.S. government. You’ll need your D-U-N-S number, Employer Identification Number (EIN) and NAICS code to complete this step.
Next, go to 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 & loss statements, bank statements, etc.—a business plan and other basics on hand.
After you’ve created your accounts, just follow the instructions and complete the free application online.
Certification lasts for a maximum of 9 years. Businesses must undergo an annual review in order to maintain certification. After the nine years is up, that business can no longer qualify or be admitted to the SBA 8(a) program in the future.
How Long Does It Take to Get into the SBA 8(a) Business Development Program?
Generally, applications are processed within 90 days. The time it takes is dependent on the backlog of applicants and can be delayed if you submitted 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. Doing so lets contracting officials know that your business is eligible to bid through the program.
After you’re initially 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?
Although it makes it easier, enrollment in the SBA 8(a) program does NOT guarantee your business will obtain government contracts. It’s simply a tool to acquire future work by allowing your business to be included in a limited pool of socially- and economically-disadvantaged businesses.
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 and offers many benefits, the program only works if you utilize it correctly.
In order 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 one 9-year period, you don’t want to waste that time learning the basics. Doing so will bar you from obtaining contracts and making money that you could with more knowledge of the process.
- 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. 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. Approval and, consequently, obtaining contracts can be an effective morale booster and motivator for employees.
- Assign an SBA 8(a) monitor. Just because you run the daily operations doesn’t mean you can’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?
Since you only have one 9-year period to be enrolled, it’s important to make sure it’s the right time to apply. The potential to secure lucrative government contracts is intriguing, but it’ll mean nothing if you don’t have the experience to capitalize on them. Assess your knowledge of the federal contract process as well as your business’s current and future goals before making a decision. 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.