By Ariana Billingsley, PTAC Counselor @ East Carolina University
As a PTAC counselor I constantly receive calls from entrepreneurs and prospective entrepreneurs interested in the 8(a) Business Development program also known as the 8(a) certification. There are always lots of questions and I find that there is often some confusion about what this certification is and most importantly what it means for your small business.
The 8(a) business development program is designed to assist socially and economically disadvantaged entrepreneurs to gain access to the “economic mainstream of American Society”.
Per CFR 124.101, a business “meets the basic requirements for admission to the 8(a) BD program if it is a small business which is unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States, and which demonstrates potential for success”
As stated in the regulation governing the 8(a) BD program, one important part in both qualifying and certifying is the potential for business success. In assessing a firm’s potential for success the Small Business Administration (SBA) will consider factors such as:
- Access to capital and credit, including working capital, bonding capability, and long term financing.
- Technical knowledge and management expertise to run the day to day operations.
- Records of performance on previous contracts: both government contracts and commercial ones.
The company should be in business for at least two years and has to show capability to take advantage of the opportunities that this program affords. Further, because of the limited time nature of this program, it is important that the company has a mechanism in place to create a balance between government contracting and commercial work. Participation in the 8(a) BD Program is divided into two phases over a nine year period: developmental stage (first 4 years) and transition stage (last 5 years).
The goal of this business development program is to graduate 8(a) businesses that will go on to thrive in a competitive business environment. Some of the benefits of the 8(a) BD program include:
- Access to sole source/non-competitive and competitive set-aside federal contracts.
- Limited competition. When procurement is 8(a) set aside, only 8(a) certified companies can compete and since there are a limited number of firms in the program at any given time, the competitive pool is far less crowded.
- 8(a) certification can make a firm attractive to larger federal government prime contractors who are looking for teaming, joint ventures and/or mentor-protégé relationships.
The certification process can take anywhere from several weeks to several months. There are a number of documents, including a business plan that the applicant company has to submit with their online application. Assembling these documents along with providing additional documents that SBA may require during the review process can take time. Once a complete application has been submitted, it will take SBA up to 90 days to make a decision on whether the applicant firm will be accepted in the program.
So, in conclusion, the 8(a) Business Development Program is a great program that can open many doors for a small business, but make sure you are ready to take advantage of potential opportunities. You have to take time and accomplish research or it will only end up being a waste of time. For additional information about the 8(a) Business Development Program contact your local PTAC counselor or visit the Small Business Administration website at www.sba.gov