Overview of 8a Certification
Small Business Association wing of the United States Government offers a business and training program for ownership on a diversity basis. 8a is a certification that is offered to small businesses for their overall growth. It is a nine-year business development program that offers training, counseling, marketing, and other forms of technical assistance to small businesses that have been certified. That means it is not just a certification but a complete program.
The first four years of that certification program are called development stages, and the last five years are part of the transition stages where businesses can develop on their own. The ultimate goal of 8a-certified businesses is to grow, improve, become commercially viable, and thrive in a competitive business environment.
The federal government’s goal is to award at least five percent of all federal contracting dollars to small disadvantaged businesses each year. To help provide a level playing field for small businesses owned by socially and economically disadvantaged people or entities, the government limits competition for certain contracts to businesses that participate in the 8(a) Business Development program.
Disadvantaged businesses in the 8(a) program can:
- Compete for set-aside and sole-source contracts(1) in the program
- Get a Business Opportunity Specialist to help navigate federal contracting.
- Form joint ventures with established businesses through the SBA’s mentor-protégé program
- Receive management and technical assistance, including business training, counseling, marketing assistance, and high-level executive development
The details of who are disadvantaged are eschewed under Title 13 Part 124 of the Code of (2) Federal Regulations(3) (CFR)
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What are the Eligibility Criteria for This Certification?
This certification is for organizations in which socially- and economically-disadvantaged individuals own at least 51% of the controlling stake. For eligibility for this program, SBA classifies African-Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and Subcontinent Asian Americans to be at a social and economic disadvantage.
SBA would consider other individuals too if they can show that they are disadvantaged due to race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar cause.
Apart from those eligibility criteria, some other ones for individuals are
- Be owned by someone whose personal net worth is $250,000 or less.
- Be owned by someone whose average adjusted gross income for three years is $250,000 or less.
- Be owned by someone with $4 million or less in assets.
- Have the owner manage day-to-day operations and also make long-term decisions
- Have all its principals demonstrate good character
What is the Certification Process for 8a Certification?
Certification to the SBA 8(a) program requires the submission of an application, either electronically or paper-based. SBA advises reviewing the online training tools available on their site before applying. After creating an account in certify.SBA.gov, you’ll have to provide some information. The information you’ll need to provide will vary based on your business structure and whether you’re already participating in other SBA programs.
If you’re accepted into the program, your profile in the Dynamic Small Business Search will show your approval date and exit date for the program. It takes several companies a year to get certified, and approximately 70 percent of all applications to the SBA are rejected. The more supporting documentation you can find, the better. Your certification will last for a maximum of nine years.
The U.S. Small Business Administration adjusts the number of annual sales and/or employees that a company must be under to qualify as a small business according to the company’s North American Industry Classification System (NAICS) code. You’ll need to complete annual reviews to maintain your good standing in the program. For a complete listing of NAICS codes, use the link. Bad credit doesn’t always affect the business as long as it is just a bad credit score and not unpaid bills and other monies.
What are the Benefits of 8a Certification?
- SBA certification limits the field of competition on federal contracts. Out of approximately 24 million businesses in the USA, only 8500 are 8a certified. Contracts awarded can be pretty large for 8a firms. Contracts are always $4million for products and services and $65 million for manufacturing firms, which is again a major opportunity for 8a certified firms to avail contracts of high value.
- SBA certification limits the field of competition on federal contracts.
- Out of approximately 24 million businesses in the USA, only 8500 are 8a certified.
- Contracts awarded can be pretty large for 8a firms. Contracts are always $4million for products and services and $65 million for manufacturing firms, which is again a major opportunity for 8a certified firms to avail contracts of high value.
- Sole Sourcing accounts for about half of all 8a sales or approximately $16 Billion dollars annually
- The SBA acts as a liaison with the 8(a) firm in order to help the 8(a) firms obtain federal contracts. This benefits the 8a firm in the reduction of time necessary to achieve its first federal sale. For most 8a firms the SBA will send out letters of introduction which help the 8a firm make initial contact with their targeted market.
- These contracts can be accomplished by teaming with other partners. This is because 8a firms are permitted to partner with other firms in what is known as a joint venture or mentor protégé arrangement. This is often done with large federal prime contractors.
- Due to the limited number of 8a firms and the fact that they are all small businesses 8a firms are able to receive better pricing than their non-8a small business peers.
- 8a firms have the capability of growing much faster than their peers. The Washington Post publishes the fastest 50 each year made up of the fastest growing federal IT contractors working for the federal government. It is not an accident that 31 of the fastest 50 are 8a IT firms.
