Section 8(a) of the Small Business Act established a program to provide small businesses run by members of socially or economically disadvantaged groups to compete more effectively for market opportunities. The program provides business development help to accepted firms to compete for procurement opportunities in the private and federal marketplaces.
The Program provides business consulting services to owners of firms from disadvantaged groups. This support takes the form of procurement help; business counseling; financial help; surety bonding; and other management and technical help resources. The (8(a) Program to positions these small companies to compete effectively for procurement and other business opportunities.
The local SBA district office serving your area is the best place to start when you’re interested in participating in the Program. Many of the general questions can be answered over the phone by Small Business Administration representatives. Additionally, many Administration district offices offer Program workshops that provide orientation information on eligibility requirements and help with the variety of Small Business Administration forms.
Fulfilling the requirements of the Program are easily understood. The applicant company needs to be a small business and must be owned and controlled by a member of an economically or socially disadvantaged group. The controlling owners of the company must be of excellent character and be able to exhibit potential for success. The owners must also be citizens of the United States.
A small business is defined by the Small Business Administration as an entity that is organized for profit and independently owned and operated. The firm also must not be dominant in its field. Characteristics such as number of employees and sales volume, usually averaged over a three year period are dependent upon the industry in which the company operates. The basic reference used by the SBA is the Standard North American Industry Classification System (NAICS) which is used by the Federal Government to classify specific business activities that delineate the primary business of the company.
Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as members of a group. Social disadvantage must stem from circumstances beyond their control. In the absence of evidence to the contrary, individuals who are members of the specific designated groups are presumed to be socially disadvantaged.
Individuals that are not members of a designated group can claim social disadvantage on the basis of a “preponderance of evidence.” Generally, preponderance is evidence of quality and quantity which leads the choice maker to conclude, objectively, that the existence or truth of the fact(s) asserted is more probable than not. This evidence must include at least one objective distinguishing feature that has contributed to social disadvantage, such as race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged.
Lack of access to capital and credit opportunities is one of the key factors in gauging if one is economically disadvantaged. When coupled with social disadvantage it is a measure of how effectively one can compete in the free enterprise system.
A two year operating history is usually the minimum to apply for certification under the Program. Tax returns showing operating revenues for at least two years in the business area that the firm is applying are required to meet this requirement.
Participants in the Program receive help in two stages. The first stage is the development stage and the second is the transition stage. The Small Business Administration provides business development help in the first stage of participation in the 8(a) program. The focus of the development stage is to help the firm in overcoming its economic disadvantage and usually lasts for four years. The transition stage is designed to help participants overcome the remaining elements of economic disadvantage and to prepare participants for leaving the Program. The second stage of the program last for five years.