Myths About 8a Certification
1.) Your company cannot get 8a certified if a close relative is currently 8a certified.
The SBA has a waiver which can be granted if the firm is located in a different region or industry than the close family relative.
2.) The majority of your business must be in the private sector or you will lose your 8a certification.
Failure to meet competitive business mix targets (during the transitional stage of the 8a program years 5-9) could result in the loss of an 8(a) firm’s ability to take part in future set-aside contracts until the business mix target is met. Lack of a good faith effort to take corrective action could also result in a loss of the 8(a) certification. Below is the schedule for non-8(a) business activity requirements.
|Participant’s year in the transitional stage||Non-8(a) business activity targets (required minimum non-8(a) revenue as a percentage of total revenue|
|1 – (year 5)||15%|
|2 – (year 6)||25%|
|3 – (year 7)||35%|
|4 – (year 8)||45%|
|5 – (year 9)||55%|
3.) Your company cannot get 8a certified if it has not been in business for at least 2 years.
There is a waiver process for businesses looking to obtain their 8a certification sooner than 2 years. The typical requirements are that
a. The owner of the firm has significant industry experience.
b. The business has completed at least one federal contract.
c. The business has one tax return with revenue and income.
Note: A 2 year waiver is not needed if the company is only changing the organizational structure of the business. For example: Changing a sole-proprietorship to a corporation.
4.) Your company cannot get certified if your past application has been rejected by the SBA.
The SBA rejects 70% of all applications for lack of completeness. 8a applications rejected on the first attempt is very common.
5.) The 8a certification really can’t do that much for my business.
In 2011 8a certified companies received $18.4 Billion dollars which represents 2-3 million dollars in annual revenue per 8a firm.
6.) My company should be a well established mid-tier business before I apply for the 8a certification.
The SBA gives 8a companies the ability to engage in Joint Venture Partnerships and Mentor Protégé Arrangements with larger governmental contractors. These relationships can greatly increase a firm’s growth rate by providing the 8a firm with expertise, bonding, insurance, financial capabilities as well as other assistance.
7.) I must be 100% member of a minority group in order to prove to the SBA I am socially disadvantaged.
An individual that can trace 25% of their blood-lineage to a presumed disadvantaged minority group is eligible for 8a given adequate supporting documentation showing the person holds themselves out to be part of that minority group.