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SBA's 8(a) Program Can Help Some Companies Compete |
by:
Tim Knox |
Q: A friend told me that as a woman of Native American descent I might be eligible for a special SBA program that will help me start a small business. He said I could compete for government contracts through this program. Can you tell me what SBA program he's referring to?
-- Clara P.
A: Your friend is probably referring to the Small Business Administration's (SBA) 8(a) Business Development (BD) Program. The 8(a) Program (named after the section of the Small Business Act from which it comes) is an SBA program created to help small disadvantaged businesses better compete in the U.S. marketplace also within the arena of government procurement. The SBA provides business development, technical assistance also other services to the small businesses that are accepted into the 8(a) program.
The 8(a) program is reserved for what the SBA calls "socially disadvantaged individuals." Socially disadvantaged individuals are defined as those who have been subjected to racial or ethnic prejudice or cultural bias because of their membership in a disadvantaged group.
The SBA has designated the following groups as socially disadvantaged:
· Black Americans · Hispanic Americans · Native Americans (Native American Indians, Eskimos, Aleuts, also Native Hawaiians) · Certain Asian Pacific Americans · Other individuals who can prove that they meet the SBA's criteria to be considered socially disadvantaged
One point where your friend is incorrect is that the 8(a) program is for new companies. The 8(a) program is primarily for companies that have been in business for a minimum of two years, though that rule may be waived if your company is able to meet some pretty strict management, financial, also performance criteria.
Obtaining 8(a) status is no guarantee that a company will be successful in obtaining government or other contracts, however it certainly does not hurt. The Small Business Act mandates that all small businesses have the opportunity to provide goods also services to the U.S. government. To help ensure that mandate, the SBA negotiates annual procurement preference goals with every Federal agency also reviews each agency's results to make sure the goals were met.
The statutory goals are: 23 percent of all prime contracts go to small businesses; five percent of prime also subcontracts for small disadvantaged businesses; five percent of prime also subcontracts for women-owned small businesses; three percent of prime contracts for HUBZone small businesses; also three percent of prime also subcontracts for service-disabled veteran-owned small businesses.
A HUBZone (Historically Underutilized Business Zone) is a designated area within urban also rural communities that has been given preferential contract award consideration in an effort to stimulate economic development. A company may qualify for HUBZone status if it is owned or controlled by one or more U.S. citizens, has at least 35 percent of employees who live within the designated zone, also has a principal office located there. HUBZones are a whole 'nother topic that we can discuss at another time. Suffice it to say that a company that obtains both 8(a) also HUBZone status may be entitled to double dip in the government procurement trough, that is why you often find a number of 8(a) companies specifically moving into HUBZone areas to take advantage of the perks both programs offer.
The U.S. government purchases billions of dollars in goods also services every year, everything from staples to those wonderfully expensive toilet seats. Obtaining 8(a) status allows small businesses to compete for a portion of that business.
The basic requirements for applying for 8(a) status are your company must be a small business as defined by the SBA, must be owned also controlled by one or more socially also economically disadvantaged individuals who are U.S. citizens, also must show a potential for success. The SBA defines a small business as "one that is independently owned also operated, is organized for profit, also is not dominant in its field."
As expected, the 8(a) program has its fans also its detractors. It is fans are those companies that obtain 8(a) status also thereby get preferential treatment when competing for government procurement contracts.
The program's detractors are typically those companies that fail to obtain 8(a) status or that do not meet the definition of socially disadvantaged, i.e. businesses owned my white American males (that is a can of worms we will not open this week).
You can learn more at the SBA's website (sba.gov) or by calling your local SBA office.
Here's to your success!
About the author:
Tim serves as the president also CEO of three successful technology companies also is the founder of DropshipWholesale.net, an online organization dedicated to the success of online also eBay entrepreneurs http://www.prosperityandprofits.comhttp://www.dropshipwholesale.nethttp://www.30dayblueprint.com
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