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8(a) certification tips from an industry expert

Note: This post has been updated with the latest information from SBA on their 2023 social disadvantage requirements.

The Small Business Administration’s (SBA) 8(a) program is a valuable tool that helps small businesses win government contracts. 

Hutch Program Manager Stephanie Chin sat down with Monica Randall — CEO of The Randall Group and Hutch coach — and Summer Bazemore — CEO of Ey3 Technologies and Hutch graduate — to discuss the 8(a) certification process. 

Monica worked at SBA for 23 years before founding The Randall Group in 2011. She’s now leveraging her extensive experience and insider knowledge of the 8(a) program as a Hutch coach. And Summer, who has over 20 years of experience in systems engineering and computer science, received 8(a) certification for Ey3 in June 2022. 

The combined knowledge and experience of Monica and Summer resulted in a fascinating and informative discussion full of useful tips for anyone interested in getting their 8(a) certification. 

What is 8(a)?

At Hutch, we understand how difficult it is to own and run a small business. This is one reason why we encourage the entrepreneurs in our cohorts to consider 8(a) certification. 

8(a) is a nine-year program that helps disadvantaged small businesses win government contracts. It’s a valuable certification that allows small businesses to go after contracting opportunities that are set aside for those who hold 8(a) certification.

“As a small business,” says Summer, “it can be hard to get into the right spaces and make the right partnerships quickly. But being 8(a) certified is advantageous to us and allows us a better chance of success.”

8(a) certification helps small businesses reach clients and win contracts they may not have access to without it.

If you want to learn more about why Ey3 decided to get 8(a) certified and what they learned from the process, check out our post discussing their 8(a) journey.

Tips to know before applying.

Taking the time to prepare as much as you can before applying for 8(a) will ensure a smoother process. It will also allow you to hit the ground running as soon as your application is approved. Here are a few tips to help make that process easier.

Eligibility.

One of the first steps to your application process will likely be determining your eligibility for the program. SBA’s eligibility requirements are that: 

  • You must be a small business.
  • You must not have previously participated in the 8(a) program.
  • Your firm must be at least 51% owned and controlled by US citizens who are socially and economically disadvantaged. As of August 21, 2023 you’re required to submit a social disadvantage narrative to establish your eligibility. 
  • You must have a personal net worth of $850 thousand or less, adjusted gross income of $400 thousand or less, and assets totaling $6.5 million or less.
  • You must demonstrate good character.
  • You must demonstrate your potential for success, such as having been in business for two years.

SBA also has a useful Am I Eligible? tool that helps your small business determine if you qualify for the 8(a) program

But, while these are valuable starting points, it’s hard to know what these requirements actually mean and how SBA evaluates them. Learn more about 8(a) eligibility and if it’s right for your business. 

Your vendors should be very familiar with the 8(a) process.

Begin working with vendors and service providers who are familiar with 8(a) as early as you can. 

“If you’re just getting started and you plan to get your 8(a),” says Summer, “make sure that your vendors and service providers are very familiar with the process. If they understand and have some experience at it, you’ll be set up to be successful when you begin this process”

For Summer, she particularly recommends looking for accountants who are familiar with 8(a) as early as you can. Doing so will ensure that your taxes are organized according to SBA’s standards. It will also help you avoid lengthy amendments during the application process. 

But it’s not only financial advisors who can help ensure a smoother 8(a) application process. Consulting companies like The Randall Group are also valuable resources that can help guide you through every step of the process. 

Without the help of Monica and The Randall Group, Summer says that she “doesn’t know if we would have been successful. Just knowing everything that went into the application process and that we had to put together.”

Remember: you don’t need to do this process on your own. There are many experienced vendors and service providers out there who can help you on your 8(a) journey. And working with them early on is a great way to create a smoother application process.

Marketing.

Many people might assume that marketing your 8(a) certification should only begin once you’ve been certified. But this would be too late. Instead, you should begin marketing while you’re still in the application process.

“Start marketing immediately,” says Monica. “8(a) is all about marketing and building relationships. It’s one of those certifications that you need to know how to leverage. And you need to tell both your potential and existing clients that you’ve been certified or that you’re working on your certification.”

8(a) certification isn’t enough on its own. Without marketing yourself and your certification, you’ll fail to win the contracts that will be available to you through the program. Taking the time and expending the effort to invest in marketing will help you fully leverage 8(a). 

Common application mistakes.

8(a)’s application process is notoriously difficult and mistakes are common. Each mistake will delay when your application is approved. But it’s important to remember that most mistakes are solvable. If you find that there are any that you can’t mitigate before you begin the application process, that probably means you should put off applying until you can. 

Character issues.

SBA conducts an FBI background investigation on the individual on whom eligibility is based to ensure they have good character. And a common mistake is failing to include — or simply forgetting — something on your record. Even if it occurred decades ago and was ultimately dropped, it’s still important to disclose. 

“If you submit your application and leave something out,” says Monica, “that will go against your character evaluation and result in an automatic rejection” as it can seem as though you’re purposefully hiding it. 

Being thorough and disclosing any character issues in your application will help you avoid the automatic rejection that not disclosing them could necessitate.

Financials not being in order.

This can be something as simple as your company’s retained earnings. Over her 33 years of experience, Monica has “seen in almost every letter that every client has ever received from SBA after submitting their application that the retained earnings didn’t carry forward from one year to the next.”

Monica’s biggest piece of advice to address this mistake is to “go back and check that your retained earnings are being correctly carried from one year to the next.” 

Operating at a loss.

It’s also important to ensure that your company isn’t operating at a loss. This requirement is necessary because it demonstrates to SBA that you have the money required to fund contracts and win work. 

This might seem like an easy requirement to fulfill when you first apply. But the lengthy nature of the application process can mean that by the time your application is ready to be approved, your business might no longer be as financially stable as it had been. This will then cause the application process to stop.

Keeping a close eye on your finances, keeping your business in good standing, and waiting to apply until your firm’s finances are strong will help you avoid any delays that operating at a loss would bring.

Your firm’s infrastructure isn’t strong.

Finally, you’ll want to ensure that your firm’s infrastructure is strong. An important aspect of this is having meeting minutes not only recorded and preserved, but also easily available as you’re required to share them with SBA. 

Even if you’re a sole-member LLC, SBA requires that you meet with yourself at least once a year and document the minutes of that meeting. This might seem a bit ridiculous, but it’s a requirement that will be important for your certification. And if you don’t do this from the beginning, you’ll have to go back and date two years’ worth of these minutes.

This work, while it might seem difficult and tedious, will result in you having a better company, internally. 

Myths about 8(a) certification.

8(a) is a well-known and popular certification program. But there are still some myths and misconceptions surrounding it. Recognizing these myths will help you understand what the program entails and what you can expect from it. 

8(a) will make you rich with minimal effort.

8(a) is a valuable certification that can do a lot for your company. But it’s important to remember that it’s also a business development program. It wasn’t created or designed to make individuals rich. 

8(a) certification allows your small business to compete with other businesses that are the same or a similar size to yours. This gives you the opportunity to bid on contracts that you wouldn’t normally have access to. While this creates amazing opportunities, it also requires a lot of work. 

According to Monica, “8(a) can make you a millionaire and it can make your business humongous.” But it’s going to take a great deal of effort to reach that payoff. 

SBA will hold your hand throughout the process.

Another common misconception is that when you get certified, SBA will hold your hand throughout the program. Whether this is by finding you clients and contacts, or handing you contracts.

By getting certified, you will have access to one-on-one business development assistance. You’ll also have technical help and mentorship opportunities. But SBA expects you to come into the program with a certain level of knowledge. 

By requiring applicants to have been in business for at least two years, SBA assumes that you already have customers and that you know how to get work, fund a contract, and perform well. 8(a) is a business development program aimed at small businesses that are ready to hit the ground running on their own. 

If this isn’t what you were expecting when you started looking into 8(a), you can always wait to apply until you feel that you have a better knowledge base. You can also utilize a consulting firm like The Randall Group, who will help you identify knowledge you might be missing. They’re “available to answer questions and send over information,” says Monica. “Even if it necessitates a lot of back and forth, in the end it ensures that, by the time you get approved, you’re ready to get to work.”

8(a) certification TLDR.

8(a) is a valuable certification that can give your small business an edge in a very competitive environment. But, if you’re still not sure if 8(a) is right for you and your business, our post “Is 8(a) right for you?” can help.

Watch our LinkedIn Live to hear Stephanie, Monica, and Summer share their 8(a) certification tips.

Is your small business eligible for SBA’s 8(a) program?

Note: This post has been updated with the latest information from SBA on their 2023 social disadvantage requirements.

The US government awards billions of dollars in contracts every year. Becoming a government contractor can be a game changer for small businesses looking to grow their clientele, but it can be hard to break into this space. 

Unlike a private sector client that can simply choose a firm to work with, the federal government needs to ensure that there’s free and open competition. The competition for government work can be fierce, and this can make it hard for small businesses to break into this space.

To even the playing field for  small businesses owned by socially and economically disadvantaged people, the Small Business Administration (SBA) created the nine-year 8(a) program. The program provides 8(a)-certified businesses with training, technical assistance, and special set-aside and sole-source contracting opportunities.

These sole source contracts can be especially huge for small businesses. Through them, 8(a)-certified firms can win new government work with no competition.

But the 8(a) program is difficult to get into, and it has some stringent eligibility requirements that can be hard to make sense of. This post will help you unpack these requirements. 

8(a) program eligibility requirements.

If you’ve explored the 8(a) program at all, you’ve probably come across SBA’s list of 8(a) program qualifications. 

SBA’s eligibility criteria for the 8(a) program:

  • You must be a small business.
  • You must not have previously participated in the 8(a) program.
  • Your firm must be at least 51% owned and controlled by US citizens who are socially and economically disadvantaged.
  • You must have a personal net worth of $850 thousand or less, adjusted gross income of $400 thousand or less, and assets totaling $6.5 million or less.
  • You must demonstrate good character.
  • You must demonstrate your potential for success, such as having been in business for two years.

But what do these requirements actually mean? And how does SBA evaluate you against them? 

You can check out SBA’s Am I Eligible? tool for help determining if you qualify for the 8(a) program. But if you want to really understand each of these eligibility requirements, these next sections are for you.

Your company must be a small business, as determined by its primary NAICS code.

To do business with the federal government, small businesses have to register in the System for Award Management (SAM). When you register in SAM, you have to select your primary NAICS code. These codes are grouped by industry and provide information on the types of goods or services that your business provides. 

The SBA assigns a specific size standard to each NAICS code, which is what will be used to determine if you qualify as a small business. You can use SBA’s Size Standards Tool to easily check if you qualify as a small business. Or you can check out the SBA’s Table of Small Business Size Standards.  

It’s important to note here that your size is based on your primary NAICS only. If you qualify as a small business under a secondary NAICS code that you have listed in SAM, but not your primary one, you won’t be eligible.  

You can’t have previously participated in the 8(a) program (and neither can your business). 

Heads up, serial entrepreneurs: the 8(a) program is a one-time-only experience for both firms and individuals. A business can only participate once, even if the ownership and control of that business has completely changed. 

And a person can only participate once, too. Once you’ve used your disadvantaged status to qualify one firm, you’re considered non-disadvantaged by the SBA after that. Because of this, it’s critical that — even if you’re eligible — you make sure you’re ready to take full advantage of the 8(a) program before you apply. 

Your business must be at least 51% owned and controlled by US citizens who are socially and economically disadvantaged. 

This is one of the more complicated requirements, so let’s break it down. 

What’s meant by “51% owned and controlled.”

To be eligible for the 8(a) program, you have to have majority ownership of your company. You also have to be a US citizen and to manage the business on a full-time basis (it’s very hard to get in if you have any outside employment). 

SBA will also review your business’s bylaws and operating agreements to make sure that you aren’t operating under negative control. In this situation, you may be the owner of the business on paper, but can’t actually do anything without someone else’s go-ahead. To be eligible for the 8(a) program, you need to have majority control of your business with no strings attached. 

What’s meant by “socially disadvantaged.”

As of August 21, 2023 SBA has updated their socially disadvantaged requirements, and applicants hoping to receive 8(a) contracts now need to submit a social disadvantage narrative.

Before this change, Black Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent Asian Americans, and Native Americans were automatically considered socially disadvantaged. But SBA can no longer presume the social disadvantage of applicants.

If you’re currently applying for the 8(a) program or your application is in process, you’ll be required to include a social disadvantage narrative. If you have submitted your application and you haven’t included this narrative, your application will be returned to you requesting this information. If you have not submitted your application, you can upload your narrative at any time.

For more information on the new social disadvantage requirements, read SBA’s FAQ.

What’s meant by “economically disadvantaged.” 

In addition to being socially disadvantaged, you also have to be economically disadvantaged to be eligible for the 8(a) program. 

What SBA means by this is that your reduced access to capital and credit has put you at a competitive disadvantage, making it hard for you to participate on an even footing in the free market. 

The next requirement is closely related, laying out specific financial caps that 8(a) applicants have to adhere to.  

You must have a personal net worth of less than $850 thousand, an adjusted gross income of $400 thousand or less (averaged over the past three years), and assets totaling $6.5 million or less. 

To ensure that the 8(a) program is supporting economically disadvantaged individuals, SBA sets out some strict requirements for your personal net worth, adjusted gross income, and total assets. Some exclusions apply (for example, when calculating your personal net worth, you can exclude the value of your primary residence). But outside of these exclusions, these numbers are very firm. 

To prove that you’re eligible for the 8(a) program from a financial standpoint, know that you’ll have to submit detailed documentation for you, your spouse (if you have one), and your business. 

You have to demonstrate good character.

This one can be pretty subjective, and how exactly it’s determined is based on the analyst you get. Because of this, it’s critical that you build a good relationship with your SBA analyst — especially if something in your past could be considered a point against your character. 

Some things that SBA considers evidence of bad character include: 

  • Information on possible criminal conduct by the applicant or its principals
  • Violation of SBA regulations.
  • Debarred or suspended individuals or firms.
  • Applicant firms and principals that lack business integrity as shown by an indictment, guilty plea or civil judgment.
  • Any principal who is incarcerated or on parole or probation.
  • Evidence that the firm knowingly submitted false information during the application process.
  • Any firm or any of its principals that fail to pay financial obligations to the Federal Government.  

You have to demonstrate your potential for success, such as having been in business for two years.

This requirement is also a bit subjective, so it can trip people up. Essentially, this means that you need to convince SBA that your business can be successful in the program. This question is all about persuading the agency that you’re worth their investment. 

To determine this, SBA will ask for proof that you’ve been operating in your primary industry for at least two years. (Note that the application will ask you for three years’ worth of financial statements, but you only need a minimum of two.)

If you haven’t been in business for two full years yet, you can seek a waiver for this requirement. But the waiver is incredibly difficult to get, so we don’t recommend going this route. Instead, we suggest waiting this out. Take the next year or two to generate stronger revenue, set up your lines of credit, and line everything up so you can hit the ground running when you are eligible.

To determine your potential for success, SBA will also look into your: 

  • Financial capability (including capitalization, financial performance, bonding capacity, and manageable debts). 
  • Managerial and technical capability (including performance on past contacts, prior experience, and personnel, licenses, certifications, and facilities).
  • Management capability (including the education, experience, and training of the CEO and other managers, the magnitude and complexity of past and current jobs, and your management systems). 
  • Qualifications for your ability to perform on federal contracts (including your relevant contracting experience and ability to meet federal procurement policies).

Ineligible people and businesses.

In addition to the requirements above, there are also a few things that will automatically exclude you and your business from participating in the 8(a) program. 

First, you can’t be a broker or a nonprofit organization. Second, you and your business can’t have been debarred or suspended in the past. Any of these are an automatic no-go for SBA. 

Eligibility is just one piece of the 8(a) puzzle.

If you think your firm is eligible for 8(a) certification, congratulations! The program could be a huge help to you and your business. 

But, while knowing if you’re eligible for certification is an important step, there are other things to consider before you get 8(a) certified. The 8(a) certification process is intense, and it requires a big upfront investment of time and resources. And the program isn’t for startups, so you’ll want to make sure you’re ready when you apply. 

If you’re not sure whether you should move forward with the 8(a) program, check out our guide for how to decide if you should get 8(a)-certified.