The goal of the federal government is to award a minimum of five percent of all federal contract spending to small, disadvantaged businesses every year. One way this is done is with 8a certification.
What does it mean when you hear someone mention a company has earned 8a certification? It means the business has applied for the SBA 8a Business Development Program and it is recognized as being eligible for the 8a certification. This is because it meets all the prerequisites of the SBA loan program.
Before moving into how to get 8a certification, it is essential to review what the SBA 8a Program is.
Explaining the SBA’s 8a Business Development Program
This program is run by the Small Business Administration (SBA) to provide help to small, disadvantaged businesses. The goal is to help these businesses acquire governmental contracts. As mentioned above, the goal of the government is to award a minimum of five percent of all contracts to these eligible companies.
You may wonder what “disadvantaged business” means. This is an organization that is unconditionally controlled and owned by one or several people who have been defined by the SBA as being economically and socially disadvantaged.
To qualify, the individuals must be members of a specific group, such as Hispanic Americans, Native Americans, or African Americans, or they have experienced social disadvantage because of physical abilities, gender, origin, race, or similar attributes.
Also, these individuals must not have any type of an economic advantage.
Benefits Offered by 8a Certification
Becoming eligible for the 8a program offered by the SBA and qualifying for the 8a certification requirements is something that can be lucrative. If you are eligible, you will receive specific privileges.
For example, your business will be eligible to receive government contracts that are set-aside. This means there is low competition for them and that it is limited to small businesses only. Also, you can access a sole-source contract. These are contracts that have virtually no competition.
Another benefit offered by 8a certification is access to a Business Opportunity Specialist from the SBA. This professional can help guide you through the entire SBA 8a application process. There are a variety of training programs along with technical and marketing help that is provided to disadvantaged businesses as well.
Steps to Earn 8a Certification
Before you can receive all the benefits offered by 8a certification, you have to qualify and meet the eligibility criteria.
The qualifications for 8a certification require the use of an eligibility test. The specific criteria for this include:
This program is strictly for small businesses! You need to have a three-year average revenue that does not exceed the government-set limit.
First Time Participant
Receiving 8a certification is a one-time process. If you already have this certification or if you have participated in the program in the past, you will not be eligible to apply again.
You must have a disadvantaged business. This means that the business is both owned and controlled (i.e., 51% ownership) by economically and socially disadvantaged people.
Someone who is considered economically disadvantaged must be a U.S. citizen, and they must have an adjusted gross income for the past three years that is $250K or less. Also, the true value of their assets cannot exceed $4 million.
The Principal Owner Must Exhibit Good Character
To receive an 8a certification, the business’s owner should not have a criminal record. They must not have violated any SBA loan programs in the past. They should also not have been in prison or otherwise due to a conviction or a guilty plea.
Also, if you knowingly submit any false information to receive 8a certification, you will be disqualified for the program.
The Potential for Success
You must show the potential for success. What this means is that your business should have been operating successfully for approximately two years and primarily in the industry where you would like to receive the 8a government contracts.
You must have a company that is not in debt and have enough capital as well as other capabilities (equipment, personnel, etc.) to handle the GSA contracts.
Tips to Apply for an SBA 8a Certification
Before moving forward with SBA 8a certification, you have to register with SAM – the System for Award Management. This is a required step and is how you receive credentials to log into the proper website to begin the application process.
Creating the SAM account means your business is officially registered, has a TIN or EIN to pay taxes, and has a D-U-N-S Numbers.
Before registering, you need to gather all the required documents related to your business. Some of the documents necessary for the 8a certification process include:
- Personal history statements
- Bank statements
- Business and personal tax returns
- Financial statements
It is also important to note that the SBA may request other documentation to determine your eligibility. Once you have gathered the needed documents, you can begin the application process to see if your business is eligible for 8a certification.
SBA 8a Certification: Does Your Business Qualify?
There is no question that obtaining an SBA 8a certification provides you with a list of benefits. However, the application and qualification process are often difficult.
If you are looking for more information about loans and financing options for your business, be sure to check out some of our other blog posts or use our “apply now” feature to see what you can qualify for.
Our goal is to provide information about business loans and services that will help ensure your business continues to grow and succeed.