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U.S. Small Business Administration (SBA) – Are You Eligible to be Certified as a Small Disadvantaged Business?


U.S. Small Business Administration (SBA) – Are You Eligible to be Certified as a Small Disadvantaged Business?

As a small business, there are several types of certifications that you can obtain that can help you qualify for more government contracts. By registering with the Small Business Administration's 8(a) Business Development Program, you could become eligible to bid on certain contracts that are subject to little or no competition. Applying for certification with the Business Development Program is free; companies simply have to take the time to apply. Obtaining this certification is certain to help small businesses find more contract opportunities in the public sector.

Are you Eligible to Apply?

In order to be approved for the 8(a) Business Development Program, businesses must be able to answer “Yes” to all of the following questions:

  • Is the business majority owned (51 percent or more) by an individual?
  • Is the individual who owns the business an American Citizen, either by birth or naturalization?
  • Is the business considered to be small according to SBA’s size standards?
  • Is the business 51 percent (or more) owned as well as controlled/managed by one or more individuals who are socially and economically disadvantaged?
  • Do the individuals who control/manage the business meet the requirements of being socially/economically disadvantaged, and can prove their status?
  • Can the business demonstrate a potential for success?
  • Do the business principals show good character?

Note: There are separate eligibility requirements for business owners who are American Indians, Native Alaskans, Native Hawaiians or Certified Development Companies

*Source: SBA: U.S. Small Business Administration. Eligibility Requirements. sba.gov n.d

How a Business is Deemed Economically Disadvantaged

The SBA will assess the following factors to see if the business meets the Administration’s requirements of being economically disadvantaged:

  • Business income from the past 3 years, including any unusual income levels or fluctuations
  • The fair market value of all business assets
  • Personal net worth of the ownership (assets and liabilities)
  • Transfers of assets by owners to immediate family members, either directly or via trust
  • Availability of individual retirement account (IRA) funds or other official retirement accounts
  • Any income received by the owner from the firm when filing taxes as an S corporation or partnership
  • Reinvestments into the applicant firm
  • Tax payments for the firm

*Source: SBA: U.S. Small Business Administration. Economic Disadvantage Eligibility Requirements. sba.gov n.d

The Business Development program can help businesses develop and expand by taking advantage of special counseling, training, and business management support programs offered by the SBA.  By participating in the 8(a) Business Development program, businesses can gain access to a number of government contracting opportunities, many of which will be suited to the business’ service offer. .  According to figures provided by the Small Business Association, in fiscal 2010, American small businesses were awarded more than $18.4 billion in 8(a) program contracts.

Once Certified – Then What?

Once a firm has been accepted into the 8(a) program, the SBA will be able to help the businesses develop as part of the program, and will continue to monitor the business’ activities to ensure that it continues to meet the criteria for the program over a nine-year term.  For more information about the SBA and how to get certified, visit www.sba.gov/8abd/.

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Keep up to date with the evolving world of government bidding with tips, best practices, trends, research and observations. Let BidNet’s knowledge and experience work for you.

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