SBA proposes new rules for 8(a) Economic Disadvantage requirements

The SBA is proposing new rules for individuals seeking 8(a) Certification regarding economic disadvantage.

The current rule requires the disadvantaged individual to meet the following economic disadvantage requirements:

  1. Have an Adjusted Net Worth of less than $250,000 to get 8(a) Certified. Have an Adjusted Net Worth of less than $750,000 once formally 8(a) Certified for continued 8(a) Program eligibility.
  2. Have an Adjusted Gross Income (AGI) of less than $250,000 over the three preceding years.
  3. Have a fair market value of less than $4,000,000 (including his or her primary residence and the value of the application business) in total assets. Less than $6,000,000 once formally 8(a) Certified for continued 8(a) Program eligibility.

The real benefits of getting SBA 8(a) Certified

1. You will have access to sole source/non-competitive federal contracts with a value of:

  • $4M and under for all services related contracts.
  • $6.5M and under for manufacturing related contracts.

2. You will have access to competitive set-aside federal contracts with a value of:

  • $4M and over for all services related contracts.
  • $6.5M and over for manufacturing related contracts.

Top 10 8(a) Program Continued Eligibility Problems

1) Late or non-submission of 8(a) Annual Review documents.

The most common eligibility problem 8(a) firms encounter is either the late or non-submission of required 8(a) Annual Review documents. The SBA is required to review each 8(a) firm’s program eligibility every year on the firm’s certification anniversary date. Your local SBA office will send a request for the required Annual Review documents and information shortly before the end of your program year which contains the date that your submission is due back to your SBA Business Development Specialist (BDS). If it is not received by the due date, you will be sent a reminder and a second due date. If the information is not submitted by this second date, SBA’s rules & regulations require the SBA to start program termination proceedings against your firm. The termination process may result in the loss of your 8(a) certification. Once it is lost you cannot be certified in the 8(a) program again. Since annual reviews are done every year on your anniversary date, you should be prepared for it and comply on time.

3 Tips for VetBiz Verification

Below are 3 VetBiz Certification issues that we see on a regular basis.  If you can avoid these three issues, your VA VetBiz application will go through the verification process much faster and with a positive outcome.

1. Full-time Devotion to the Applicant Concern

The 51% Veteran or Service-Disabled Veteran owner(s) should devote full time to the applicant concern during normal operating hours of similar businesses.  In addition, the veteran owners should not have any other outside employment that could take away from their day-to-day management of the applicant firm.  Make sure resumes and LinkedIn profiles are up to date with current positions and previous employment has ended.  Any Veterans with outside employment will face many questions from the CVE which will most likely end in denial.

How to determine your Adjusted Net Worth

The applicant(s) for 8(a) Certification must have an Adjusted Net Worth of less than $250,000 and total assets of less than $4,000,000 to be considered economically disadvantaged by the SBA.

What is the definition of Adjusted Net Worth?

Adjusted Net Worth = Personal Assets – Liabilities – [Equity in primary residence + ownership interest in business + IRA/Other Retirement Accounts subject to a penalty for early withdrawal].

Additionally, Total Assets = Personal Assets – IRA/Other Retirement Accounts subject to a penalty for early withdrawal.