• To help provide a level playing field for women business owners, the government limits competition for certain contracts to businesses that participate in the women’s contracting program.
• Assist federal agencies to meet statutorily established 5% government-wide contracting goals for women owned small businesses.

These contracts are for industries where women-owned small businesses are underrepresented. Only contract requirements in industries designated by the SBA as underrepresented or substantially underrepresented are eligible for set-asides under the women-owned small business program. Over 300 six digit industry codes (NAICS) are eligible. See a list of the NAICS codes that are eligible for WOSB and/or EDWOSB contracts.

Some contracts are restricted further to economically disadvantaged women-owned small businesses (EDWOSB). The above link defines which NAICS codes are designed as WOSB or EDWOSB.

Again, only contract requirements in the list of industries (NAICS) designated by the SBA as underrepresented or substantially underrepresented are eligible for set asides under the new women’s program. If your business does not operate within one of the designated NAICS codes, the WOSB program will not benefit your firm.

The new program opens many doors for women entrepreneurs. However, not all contract opportunities are eligible and there are limitations.

The women-owned small business program is defined by several key rules:

• The program applies only to contracts in designated industries, as described above.
• The maximum dollar amount of contracts is limited ($4M for service contracts and $6.5M for manufacturing contracts.
• Only women-owned small businesses or economically disadvantaged women-owned small businesses are eligible.
• Competition is required for WOSB contract awards.

Joining the WOSB Federal Contracting Program makes a business eligible to compete for federal contracts set aside for the program. Firms can still compete for contract awards under other socio-economic programs they qualify for.

If you would like a WOSB or EDWOSB Program eligibility analysis, please schedule a call with one of our experts.

You are also welcome to review the basic eligibility requirements below. Generally, to be approved into the WOSB or EDWOSB Program you must meet these basic eligibility requirements:

• Have a primary NAICS code in an industry designated by the SBA as underrepresented or substantially underrepresented. See a list of the NAICS codes that are eligible for WOSB or EDWOSB contracts.

WOSB

1. At least 51% owned and controlled by one or more women who are U.S. citizens.

2. Ownership must be direct and not subject to conditions.

3. A woman or women must manage day to day operations and provide verifying documents.

4. Meet small business size standards for primary NAICS code.

EDWOSB

1. Own at least 51% of business and satisfy all conditions for a WOSB, as listed above.

2. The applicant(s) must have an adjusted net worth of less than $850,000 at the time they apply for EDWOSB Certification. Adjusted net worth = Assets – liabilities – (Equity in primary residence + value of ownership interest in business concern + IRA/401(k) or Other Retirement Accounts). Complete our adjusted net worth calculator to help determine yours.

3. The applicant(s) AGI (Adjusted Gross Income) cannot be more than $400,000 averaged over the last three tax years.

4. Have a market value of all assets that does not exceed $6.5 million (including business value and primary residence).

Keep in mind that each WOSB or EDWOSB application is unique and document requirements may vary for each Application.

Below is a general list of items that will need to be included within your WOSB or EDWOSB application. Your unique application may require additional items not specified below.

IMPORTANT NOTE: Principals may include the following: Owner(s), Officers, Directors, Members, Partners and Key employees.

Women Owned Small Business (WOSB) Information:

Qualifying individual(s) include all women claiming 51% ownership:

The following items and documents must be active and/or provided:

• An active registration in the System for Award Management for the firm, available at SAM.GOV (Note: The firm’s UEI and EIN, and MPIN must exactly match SAM registration).
• Proof of U.S. citizenship (i.e., state-issued birth certificate, certificate of naturalization, or an unexpired passport) for qualifying individual(s).
  • If your name differs from your submitted citizenship document (ex. Marriage), you may have to provide a poof of name change (ex. state filed documents -official name change, marriage license, unexpired passport, unexpired military ID (front and back copy)
• Resume
• Technical Licenses, in applicable

Existing Certification

• 8(a) Program Participant
  • Most recent annual review letter OR firms in their first program year may submit their initial approval letter

• TPC-Certified
  • Certificate from one of the four SBA approved third party certifying organizations

• CVE-Certified
  • Certification letter from Department of Veterans Affairs’ Center for Verification and Evaluation

Firms that do not have these certifications will respond NO to questions within this section and will be advanced to the next card

Firm Ownership

• Trust agreement if a trust currently holds the qualifying individual’s ownership interest
• Letter of explanation for any executory agreements

If your firm is a Corporation:

• Articles of Incorporation. (Only submitting the Secretary of State (SOS) seal certificate is not acceptable. You must also submit a copy of the firm’s Articles of Incorporation along with the certificate with the SOS seal certificate.)
  • Firms operating in another state should submit foreign filing documentation for that state and certificate of good standing from the original domestic State.
• Copies of stock certificates (front and back) and Stock Ledger. We review for accuracy and we will even draft current dated stock certificates and a ledger to ensure current ownership is reported correctly.
• Corporate Bylaws and any amendments. We review for unconditional control requirements and will even draft a current dated version if you do not have the required document or need an amended document to meet unconditional control requirements.
• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.
• Meeting minutes – Most recent meeting minutes (signed and dated) noting the election of the officers and directors
• Joint Venture agreements, if applicable
• Buy/Sale agreements, if applicable
  • Stock ledger should reflect changes executed from this agreement

If your firm is a Limited Liability Company (LLC):

• Articles of Organization and any amendments (Only submitting the Secretary of State (SOS) seal certificate is not acceptable. You must also submit a copy of the firm’s Articles of Organization along with the certificate with the SOS seal certificate.)
• Operating Agreement and any amendments. We review for unconditional control requirements and will even draft a current dated version if you do not have the required document or need an amended document to meet unconditional control requirements.
• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.
• Meeting minutes – Most recent meeting minutes (signed and dated) noting the election of the officers and directors
• Joint Venture agreements, if applicable
• Buy/Sale agreements, if applicable
  • Stock ledger should reflect changes executed from this agreement

If your firm is a Sole Proprietor:

• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.

If your firm is a Partnership:

• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.
• Partnership Agreement and any amendments. We review for unconditional control requirements and will even draft a current dated version if you do not have the required document or need an amended document to meet unconditional control requirements.

Economically Disadvantaged Women Owned Small Business (EDWOSB) Information:

Qualifying individual(s) include all women claiming 51% ownership:

The following items and documents must be active and/or provided:

• An active registration in the System for Award Management for the firm, available at SAM.GOV (Note: The firm’s UEI and EIN, and MPIN must exactly match SAM registration).
• Proof of U.S. citizenship (i.e., state-issued birth certificate, certificate of naturalization, or an unexpired passport) for qualifying individual(s).
  • If your name differs from your submitted citizenship document (ex. Marriage), you may have to provide a poof of name change (ex. state filed documents -official name change, marriage license, unexpired passport, unexpired military ID (front and back copy)
• Resume.
• Joint Venture agreements, if applicable.
• Technical Licenses, in applicable

Firm Ownership

• Trust agreement if a trust currently holds the qualifying individual’s ownership interest
• Letter of explanation for any executory agreements

If your firm is a Corporation:

• Articles of Incorporation. (Only submitting the Secretary of State (SOS) seal certificate is not acceptable. You must also submit a copy of the firm’s Articles of Incorporation along with the certificate with the SOS seal certificate.)
• Copies of stock certificates (front and back) and Stock Ledger. We review for accuracy and we will even draft current dated stock certificates and a ledger to ensure current ownership is reported correctly.
• Corporate Bylaws and any amendments. We review for unconditional control requirements and will even draft a current dated version if you do not have the required document or need an amended document to meet unconditional control requirements.
• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.
• Meeting minutes – Most recent meeting minutes (signed and dated) noting the election of the officers and directors
• Joint Venture agreements, if applicable
• Buy/Sale agreements, if applicable
  • Stock ledger should reflect changes executed from this agreement

If your firm is a Limited Liability Company (LLC):

• Articles of Organization and any amendments (Only submitting the Secretary of State (SOS) seal certificate is not acceptable. You must also submit a copy of the firm’s Articles of Organization along with the certificate with the SOS seal certificate.)
• Operating Agreement and any amendments. We review for unconditional control requirements and will even draft a current dated version if you do not have the required document or need an amended document to meet unconditional control requirements.
• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.
• Meeting minutes – Most recent meeting minutes (signed and dated) noting the election of the officers and directors
• Joint Venture agreements, if applicable
• Buy/Sale agreements, if applicable
  • Stock ledger should reflect changes executed from this agreement

If your firm is a Sole Proprietor:

• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.

If your firm is a Partnership:

• DBA (Doing Business As) or Trade Name Certificate reflecting state filing seal, if applicable.
• Partnership Agreement and any amendments. We review for unconditional control requirements and will even draft a current dated version if you do not have the required document or need an amended document to meet unconditional control requirements.

Personal Financial Information – Required for each woman claiming economic disadvantage and for each woman’s spouse.*

• Signed 1040 personal tax returns (last three filing years) including all schedules, attachments, W-2’s, 1099’s and proof of payment for any tax owed.
• A current personal financial statement and supporting statements for the following: (Checking/Savings, IRAs with terms and conditions including a signed and dated certification attesting to the fact the accounts have a penalty for withdrawal, Life Insurance (Cash Surrender only), Stocks/Bonds, Mortgage, Deeds, Fair Market Value for Real Estate, Any Other Assets (Boats, RV’s, Motorcycle, Other Business Ownership, etc.), Automobile Title/Registration and associated loans, Credit Cards, Home equity or any other Loan Agreements (Student, etc.).

*Note: SBA may consider a spouse’s financial situation in determining whether qualifying individual(s) are economically disadvantaged where the spouse has a role in the business (e.g., an officer, employee or director) or has lent money to, provided credit or financial support to, or guaranteed a loan of the business.

When the SBA has determined that your WOSB or EDWOSB Application is deemed complete, it is estimated to take approximately 90-120 days to be notified of a decision by the SBA. This time frame can be shorter or longer depending on the degree of complexity of your application.

The applicant for EDWOSB Certification must have a personal adjusted net worth of less than $850,000 at the time of EDWSOB Application submission to be considered economically disadvantaged.

The algorithm used to determine Adjusted Net Worth for EDWOSB Certification purposes is:

Adjusted Net Worth = Personal Assets – Personal Liabilities – [Equity in primary residence + value of ownership interest in applicant business + value of any IRA/401(k) or other retirement account ]

If the applicant is married and the asset or liability is jointly held, you split the value 50/50. If the applicant is married and lives in a community property state, you only split assets and liabilities 50/50 if you have a transmutation or pre/post nuptial agreement that states otherwise. The SBA does not take into consideration community property laws when determining economic disadvantage.

How can I determine my Adjusted Worth?

You can easily determine your Adjusted Net Worth by using our Adjusted Net worth calculator.

What is required to be submitted within the EDWOSB Application to prove the applicant’s Adjusted Net Worth?

Each Applicant, and their spouse, must submit a separate Personal Financial Statement. Along with the personal financial statement you may also have to  submit statements for each asset or liability supporting the amounts reported on the Personal Financial Statement, if requested by the SBA. The amounts reported on the Personal Financial Statement cannot be any older than 30 days at the time of EDWOSB Application submission.

Are there any ways to reduce an applicant’s Adjusted Net Worth below the $850,000 threshold?

Possibly. For more information, contact us.

*Important*

If you have transferred and any assets within two years of the time you apply for 8(a) Certification for less than fair market value the full amount of the asset, at the time of the transfer will re attributed back to the individual towards their Adjusted Net Worth.  However, the SBA will not attribute to an individual claiming disadvantaged status any assets transferred by that individual to an immediate family member that are consistent with the customary recognition of special occasions, such as birthdays, graduations, anniversaries, and retirements.

The SBA will also consider a spouse’s financial situation in determining an individual’s access to credit and capital where the spouse has a role in the business (e.g., an officer, employee or director) or has lent money to, provided credit support to, or guaranteed a loan of the business. This means that both would need to have an Adjusted Net Worth of less than $850,000 to qualify for the EDWOSB Program.

The $400,000 Threshold for Adjusted Gross Income (AGI)

Among the many EDWOSB program eligibility requirements the applicant for EDWOSB Certification must have is an average AGI over the past three taxes years of less than $400,000.

What is the definition of Adjusted Gross Income?

Adjusted gross income (AGI) is a tax term for an amount used in the calculation of an individual’s income tax liability. AGI is calculated by taking the applicants gross income and subtracting their maximum allowable adjustments. AGI is located on line 37 on your Form 1040 for 2017 personal taxes and before and on Line 7 for 2018 personal taxes.

How do I determine my Adjusted Gross Income for 8(a) Certification Purposes?

Step 1: The easiest way to initially determine if you exceed the $400,000 threshold, averaged over the last three years is to add up the AGI number reported on the first page of your last three years of federal tax returns.

Please note: If your portion of the applicant firm’s business income is negative or shown as a loss, you cannot deduct this loss from your AGI since losses from an S corporation, LLC or partnership are losses to the company only and are not losses to the individual and cannot be used to reduce your AGI.

If you add these three numbers, divide them by three and result is a number larger than $400,000 you must do further analysis. Go to Step 2.

If the number is less than $400,000 and your distributions taken out the company do not exceed the profits reported for your business on its tax return, your AGI is less than $400,000 without doing any further analysis.

If your distributions exceed the profits reported for your business, you must do further analysis. Go to Step 2.

Step 2: If your resulting calculation shows more than $400,000 or your distributions exceed the profits reported for your business on its tax return, and you are filing the taxes jointly with your spouse, you will then need to separate out the portion of any income reported on the tax return between the applicant and their spouse. See (Line 7 through 21 for 2017 tax returns and before and for 2018 tax returns (Line 1 through 5B + Schedule 1, line 22)

For example: (Line 7 (1040). Wages, salaries, tips, etc. = $100,000 (Applicant’s portion, $40,000 – Spouse’s portion, $60,000). Do the same for each income line as specified above.

Once you have separated out all income reported on the tax return between the applicant and their spouse take the total for the last three years and divide them by three. If the resulting calculation is still larger than $400,000 you must do further analysis. Go to Step 3.

If the number is less than $400,000 and your distributions taken out the company do not exceed the profits reported for your business on its tax return, your AGI is less than $400,000 without doing any further analysis.

Step 3:  There is one final analysis that can be performed to see if you still exceed the $400,000 AGI threshold. If the applicant business concern is an S corporation, LLC or partnership you may:

(Please note: Single Member LLC’s that file a Schedule C cannot use the below in their calculations, per the SBA):

1. Deduct any income associated with the business that was reinvested into the business concern, less any distributions taken.

Example 1: Your applicant business income shown on the tax return is $100,000. You took $0 in distributions. The result is that $100,000 was reinvested or not distributed therefore the entire $100,000 can be deducted from your AGI calculation.

Example 2: Your applicant business income shown on the tax return is $100,000. You took $50,000 in distributions. The result is that $50,000 was reinvested or not distributed therefore the $50,000 can be deducted from your AGI calculation.

2. Deduct any income used to pay the LLC or S-Corporation Federal taxes owed on behalf of the income from your LLC or S-Corporation income reported. Please note the SBA does not count or allow any State taxes you may have paid to reduce your AGI. Only Federal taxes paid are allowable to reduce your AGI.

In order to determine what the Federal taxable income tax that you paid on behalf of the business income reported on your tax return you must determine your IRS Income Tax rate.

To determine your IRS Income Tax rate, look at page 2 of your 1040 form (Line 43 – Taxable Income) for 2017 and before. For 2018, look at page 1 of your 1040 form (Line 10 – Taxable income).

Then, click here to visit a site that will show you your tax bracket percentage. Be sure the indicate the tax year, filing status and then lookup your tax bracket percentage based upon your taxable income.

Example: Your applicant business income shown on the tax return is $100,000. Your determined IRS Income Tax rate is 24% therefore you are responsible for $24,000 that would be paid to the IRS on the income from your business reported and the result would be an additional $24,000 that can be deducted from your AGI calculation.

As you can see from above, determining your AGI can be somewhat complex for EDWOSB Certification purposes. Cloveer can help you to determine your AGI should you need further assistance. We offer an AGI Analysis Service for $250.00 where we will perform an analysis for the last three years and provide you a detailed report showing you exactly what your AGI is for each year and averaged over the last three years. If you are interested in this service, please request a service agreement or give us a call at 813-333-5800 for more information.

Immediate family member means father, mother, husband, brother, sister, grandfather, grandmother, grandson, grand-daughter, father-in-law, and mother-in-law.

In order to get do business with the Federal Government your business must be registered within SAM.GOV.

Registration for a SAM.GOV profile is FREE. You do not need to hire anyone to obtain a SAM.GOV profile. There are some companies, out there, that are charging exorbitant fees ($500+) to do this for you. Stay away from them.

SAM.GOV offer a free guide on how to properly obtain a SAM.GOV profile. Allow up to 12-15 business days after you submit before your registration is active in SAM.

Your primary NAICS (North American Industry Classification System) code is the six digit code that your business earned its largest segment of revenue in, in the most recently completed fiscal year. The primary NAICS code help the SBA determine what industry you are operating in and if you are classified as a small business.

Visit the US Census Bureau to help determine your primary NAICS code.

• You can also view the latest SBA WOSB Regulations (CFR: Title 13:Part 127) and read up on the extensive rules and regulations that govern the WOSB Program.