SBA 8(a) Business Development ProgramSBA 8(a) Business Development Program

Tennessee District OfficeTennessee District Office

www.sba.gov/tn

(615) 736-5881(615) 736-5881

Tennessee District Office for 8(a) Business Development Staff!

(615) 736-5881 Vacant, District Director

615-736-5039 ext 253

Saundra A. Jackson, Senior Area Manager

901-526-9300

Vergia Bigger, Business Development Specialist

615-736-5629 ext 243

Kena Dixon, Business Development Specialist

615-736-7426 ext 254

What is the 8(a) Business Development Program?

Helps small disadvantaged businesses compete in the American Economy

Access to Federal contracting marketplace

Sole source contracting with Federal Government

See SBA 8(a) regulations (13 CFR 124):

http://www.sba.gov/library/cfrs/13cfr124.html

How Long Can A Company Participate in the 8(a) program?

Program Participation is divided into two stages

1. Developmental Stage -- first 4 years

• Designed to help 8(a) firms overcome their economic disadvantage by providing business development assistance

2. Transitional Stage -- second 5 years

• Designed to help firms overcome the remaining elements of economic disadvantaged and to prepare participants for leaving the 8(a) Program

Participation term is for period of 9 years

Annual eligibility and participation in the program is dependent on the firm’s continuing eligibility as a socially and economically disadvantaged owned/operated firm and continued compliance with the 8(a)BD participation agreement.

Eligibility Criteria

Must be a small business

Small Business Definition: depends on the industry, either

• Average number of employees for the preceding 12 months

• Sales volume averaged over a three year period

Must be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals

Must be a United Stated citizen

Must be of good character

Must demonstrate potential for success

At least 51% of the firm must be owned by socially or economically disadvantaged individuals.

Who are Socially Disadvantaged Individuals?

Those subject to racial or ethnic prejudice or cultural bias

Social disadvantage must stem from circumstances beyond control

Designated groups that are presumed to be socially disadvantaged

Black Americans Hispanic Americans Native Americans Asia Pacific American Subcontinent Asian American Others

Persons not members of designated groups must:

Establish their case by a preponderance of the evidence;

The disadvantage may stem from race, ethnic origin, gender, physical handicap, long term environmental isolation, or other similar causes;

The applicant must have personally suffered disadvantage in the United States;

The disadvantage must be substantial & chronic;

The discrimination must have negatively impacted on business advancement.

Can Individuals Not a Member a Designated Group Claim Social Disadvantage?

ANSWER: Yes!

Individual must establish social disadvantage on the basis of “preponderance of evidence”

Acceptable evidence

Court or administrative findings of discrimination

Documentary evidence, such as rejection letters on job applications, documents relating to rejected contract offers.

What does it mean to be “economically disadvantaged”?

Socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired

Diminished capital and credit opportunities

Individual’s net worth may not exceed $250,000 excluding:

Equity in the firm

Equity in primary residence

$$ EXISTING NET WORTHless $$ equity in primary residenceless $$ equity in business Equals Adjusted Net Worth (which must not exceed

$250,000)

What does “Ownership” mean to SBA?

At least 51% ownership by the disadvantaged person(s).

Partnerships: Agreements must reflect ownership by disadvantaged partner(s).

Limited Liability Company: One or more disadvantaged individual must serve as management members with unconditional control.

Corporations:

Disadvantaged persons must own at least 51% of each class of voting stock and at least 51% of all outstanding stock.

Stock option plans for non-disadvantaged individuals will be viewed as if they have been exercised.

Who must control the operations of the business to be in the 8(a) program?

Does a disadvantaged individual or individuals devote full-time to the business?

Do you have sufficient managerial experience to run the concern?

Do you have ultimate managerial control over individuals with technical expertise and/or critical licenses?

What factors are considered when evaluating potential for success?

The technical and managerial experience of the firm’s managers

The firm’ operating history

Ability of the firm to access credit and capital

The firm’s financial capacity

The firm’s record of performance

Whether the firm or individuals employed by the firm hold the requisite licenses, if the firm is engaged in an industry requiring professional licensing.

How long must the business have been in operation?

The firm must have been operational for at least two full years as evidenced by income tax returns

SBA may waive the two-year rule as part of the application if:

The individual or individuals upon whom eligibility is to be based have substantial and demonstrated business management experience;

The applicant has demonstrated technical expertise to carry out its business plan with a substantial likelihood for success if admitted to the 8(a) BD Program;

The applicant has adequate capital to carry out its business plan as a Participant;

The applicant has a record of successful performance on contracts from governmental and nongovernmental sources in the primary industry category;

The applicant has, or can demonstrate its ability to timely obtain the personnel, facilities, equipment, and any other requirements needed to perform such contracts as a Participant.

Are you a small business?

Firms must be small based on their primary North American Industrial Classification Code (NAICS code) including affiliates. (See SBA’s size web site at: www.sba.gov/size)

Size is determined either by:

• average 3 years revenues - dollars

• # of employees (manufacturers, dealers, wholesalers)

See 13 CFR 121 Size Regulations or visit our website: www.sba.gov.

Registration in Central Contractor Registration!

NOTE: Both 8(a) firms and SDB firms, or any firm doing business with the Federal government must first register in CCR (Central Contractor Registration) at www.ccr.gov.

HUB-Zone Program

Provide federal contracting assistance for qualified small business concerns located in historically underutilized business zones to:

Increase employment opportunities;

Stimulate capital investment in the designated areas

Empower communities through economic leveraging

Qualified Areas

Qualified Census Tracts.

Qualified Non-metropolitan Counties:

Median household income is less than 80% of the non-metropolitan state median household income.

Unemployment rate that is not less than 14% of the state-wide average unemployment rate.

Indian reservations (external boundary).

Requirements for HUB-Zone Program

Must be a small business.

Concern must be at least 51% owned and controlled by US citizens.

The principal office of the concern must be located in a designated HUB-Zone area.

At least 35% of the concern’s employees must reside in a HUB-Zone.

Must meet all these requirements.

The Certification Process

On-line certification.

Fully electronic application process.

Access to company records by SBA.

SBA may request additional information or clarification any time after submission.

SBA’s will periodically review HUB-Zone firms for continued eligibility.

8(a) Business Development Program, Small Disadvantage Business Certification, or HUB-Zone Certification

QUESTIONS OR COMMENTS?