What Is 8A Certification?
In the United States, the Small Business Administration (SBA) has a program called the 8(a)BD program, which gets its name from a section of the United States Small Business Act. The 8(a)BD program is intended to help disadvantaged businesses be competitive; it does this by offering these businesses support and the chance to secure federal contracts. Eligibility for the program requires a company to qualify as a small business and be owned and controlled by a person or group who is considered disadvantaged socially or economically. The business must be able to show that it has potential for success as well. If a business meets these basic requirements, it must secure 8(a)BD certification, which is basically approval, in order to participate in the program.
8a certification is available to businesses that are owned and controlled by socially disadvantaged individuals. This includes people who belong to groups who have suffered racial, ethnic, or cultural prejudices through no fault of their own. The SBA program considers African Americans, Hispanic Americans, Native Americans, and Asian Pacific Americans socially disadvantaged. It may include other groups in this category as well.
A business may also qualify for 8a certification if its owners are economically disadvantaged. By the SBA definition, an economically disadvantaged individual is a person who has difficulty competing in the business world because of the lack of enough capital and impaired credit opportunities. Generally, the SBA does not consider an individual economically disadvantaged if his net worth is more than $250,000 US dollars. This figure excludes the person's equity in the business and the equity he has in his home.
A business need not be entirely owned by socially and economically disadvantaged individuals in order for it to be eligible for 8a certification. The SBA only requires the disadvantaged owners to have majority ownership. This means a company that is 51 percent owned by socially and economically disadvantaged individuals may be eligible for the program. Additionally, businesses owned by Caucasian women may eligible as well.
There are also time requirements set for a business that wants to secure 8a certification. The SBA requires businesses to be in operation for at least two years before applying. A business also has to provide a business plan and financial statements. Additionally, the business in question must offer services or products for which federal contracts will be available. For example, this may include businesses in construction, office support, manufacturing, and technology industries.
Written by N. Madison
