Every entity that wants to do business with the Federal Government, must be registered in SAM. A complete and active SAM registration is needed in order to get paid by the Federal Government and to apply to any of the Federal Government Contracting Programs run by SBA and VA.
Do you have all your eggs in one basket? Economic Dependence is a significant obstacle to the eligibility of many applicants desiring to gain 8(a) Certification for their business. In fact, it is currently the #1 issue for which we have to turn the greatest number of potential 8(a) applicants away, until the issue is resolved.
Myth: It’s easy to get SBA 8(a) Certified.
As of September 30, 2020 there are less than 6,000 active 8(a) Program participants and have never been more than 10,000 active 8(a) Program participants at any one time in the SBA 8(a) Program’s history. Fact: The SBA returns over 90% of all 8(a) applications submitted and rejects 70% of all 8(a) applications submitted for review.
After a long time of anticipation, the SBA announced new 8(a) Eligibility Economic Disadvantage rules that go into effect on July 15, 2020. This exciting news will allow many more small business owners gain access to the SBA 8(a) Program. See the except from Federal Register. Below are the new rules that will go into effect.
Adjusted Net Worth:
Currently the 8(a) Applicant must have an Adjusted Net Worth of less than $250,000, to become 8(a) certified and be deemed Economically Disadvantaged by the SBA. The new rule increases the 8(a) Applicant’s Adjusted Net Worth to $750,000 to become and remain 8(a) Certified.
Adjusted net worth = Assets – liabilities – (Equity in primary residence + value of ownership interest in business concern + IRA/401(k) or Other Retirement Accounts)
Dear Small Business Owners,
After consultation with SBA’s Office of General Counsel, it was determined that the President’s actions constitute a nationwide federal disaster declaration for purposes of the 8(a) BD program’s voluntary suspension procedures.
As the President/CEO of Cloveer, Inc. I speak to many potential clients who are interested in becoming 8(a) Certified. I would say that 7 out of every 10 people I talk to do not and cannot qualify for the 8(a) Program due to the strict 8(a) Program requirements. Many of these individuals have tried to prepare their own application without some sort of outside assistance and learn the hard way via denial or a returned application by the SBA.
Here are a just six of most typical few reasons for a denial by the SBA we find when speaking to potential 8(a) Applicants:
- The 8(a) Applicant firm being found to be “Economically Dependent” by earning more than 70% of its total revenues from one single client over the periods of time measured by the SBA.
- The 8(a) Applicant having an “Adjusted Net Worth” that exceeds the $750,000 SBA regulatory limit that cannot be lowered without violating the SBA transfer requirements or having a spouse who is involved with the Applicant Firm whose Adjusted Net Worth exceeds this requirement too.
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:
- 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.
- Have an Adjusted Gross Income (AGI) of less than $250,000 over the three preceding years.
- 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.
One of the many questions we get is “Can I get 8(a) Certified if I have a family member who is currently or previously 8(a) Certified?”
See below for the answer to this question.
So you submitted your 8(a) Application through certify.sba.gov and now you received a “Notification“, what do you do next?
Step 1: Login to certify.sba.gov.
Step 2: Go to the top of the page and click on “Notifications“. See below.
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.