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SBA 8(a) Program – Big News!

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)

Retirement Funds:
Funds invested in an Individual Retirement Account (IRA) or other official retirement account will not be considered in determining an individual’s net worth, regardless of age.

Adjusted Gross Income:
Currently the 8(a) Applicant must have an Adjusted Gross Income of less than $250,000, averaged over the last three years to become 8(a) certified and be deemed Economically Disadvantaged by the SBA. The new rule increases the 8(a) Applicant’s Adjusted Gross Income to $350,000 to become and remain 8(a) Certified.

Total Assets:
Currently the 8(a) Applicant must have Total Assets of less than $4 million to become 8(a) Certified and be deemed Economically Disadvantaged by the SBA.  The new rule increases the 8(a) Applicant’s Total Assets to $6 million  to become and remain 8(a) Certified.

It is possible to suspend 8(a) Participation during a National emergency

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