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 $850,000 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 8(a) Applicant firm not being in business for two full years or being able to overcome the “Potential for Success” criteria set by the SBA for obtaining a “Two Year Waiver”.
- The 8(a) Applicant not holding the required “Licenses” or has “Loans Agreements” where someone else, other than the 8(a) Applicant, is required to meet the 8(a) program unconditional control requirements.
- Not being a member of a “SBA Designated Group” and being able to come up the level of information and evidence required to prove “Social Disadvantage”.
- Having an “Adjusted Gross Income” of more than $400,000, averaged over the last three years.
Here are a just five of most typical few reasons for a returned application by the SBA:
- Not providing all of the required “Business” and “Personal” tax returns to the SBA for review.
- Not providing a “Resume” that shows the SBA all of your past employment, education and showing that you run the day-to-day operations of the 8(a) Applicant firm.
- Incorrectly completing the “Personal Financial” section of certify.sba.gov.
- Not ensuring your “Primary NAICS Code” is consistent throughout your entire 8(a) Application documentation.
- Providing “Business Financial Statements” that do not meet the requirements.
At Cloveer, we conduct a detailed free pre-qualification interview with any potential client before we engage or start preparing their 8(a) Application.
Our questionnaire asks them the “Killer” questions that will let us, or more importantly them, know if they have an eligibility issue.
There are ways around a lot of the 8(a) Program eligibility issues but not everyone will be able to qualify.
We advise any potential client on the pros and cons to any eligibility issue and tell them when they have an eligibility issue that has no workarounds. Our feeling is that is it better for them to know now, rather than later.
We want you to know as much information about the SBA 8(a) Program as possible since you will be the one participating and using it as one of the tools to becoming a success.
The more you know, the better decisions you can make before you apply and while you are in the 8(a) Program.
For more information on the 8(a) Program, call us at 813-333-5800 or schedule a call to have your questions answered.