The Small Business Administration (SBA) offers qualifying small businesses the opportunity to apply for SBA 8(a) certification. This certification allows small businesses to contract with the federal government more easily for sole-source contracts to supply goods and services.
While the SBA is most often referenced with regard to SBA loans, the agency provides other forms of assistance to small businesses as well, including the SBA 8(a) Business Development Program. There are many types of SBA loans; however, the SBA 8(a) program does not provide financing for small businesses.
SBA 8(a) certification is issued through the SBA 8(a) Business Development Program. This program is aimed at assisting socially and economically disadvantaged business owners by providing easier access to government contracts. Certification through the SBA 8(a) Business Development Program is valid for nine years—a four-year developmental stage followed by a five-year transition stage.
SBA 8(a) Certification Benefits
There are many benefits to SBA 8(a) certification for small businesses. Once certified, your business competes only against other certified businesses for sole-sourcing federal contracts, and these contracts are often larger than those you would be able to obtain outside of the program. A unique advantage of receiving SBA 8(a) certification is the opportunity to take part in its mentor-protégé program.
Limited Number of Competitors
With less than 10,000 small businesses participating in the SBA 8(a) program, you will have less competition for large contracts. Government contracts that are accessible through this program are not available to larger businesses, meaning you only will compete against businesses of similar size and capacity.
Sole-sourcing Federal Contracts
Through the SBA 8(a) program, your business will have access to sole-source federal contracts. These contracts are non-competitive and allow your business to fulfill the needs of the contract independently. As such, your business will not be required to compete for the contract award. The contracting agency will determine that your business meets the needs of the contract based on your certification.
While your business may be able to capture some contracts on its own, the contracts offered by the federal government will likely be much larger than those obtained through private-sector markets. Federal contracts for SBA 8(a) certified businesses can be as large as $4 million for services, and up to $6.5 million for manufacturing.
Partnering with another SBA 8(a) certified business can help you navigate the ins-and-outs of the program. The mentor-protégé program allows you to garner knowledge from a more experienced business as well as the opportunity to participate in joint-venture contracts.
The purpose of the SBA 8(a) program is to assist disadvantaged business owners in growing their businesses through access to government contracting opportunities. These contracts allow businesses to grow faster than they would without the assistance of the SBA 8(a) program.
SBA 8(a) Certification Qualification Requirements
The basic qualification requirements for SBA 8(a) certification are:
- Your business must be a small business as defined by the SBA
- The business must be at least 51% owned and controlled by United States citizens who are socially or economically disadvantaged, including African Americans, Hispanic Americans and Native Americans
- Owner’s net worth must be $250,000 or less
- Owner must have $4 million or less in assets
- The owner must manage day-to-day operations for the business
- The business must have demonstrated potential for success—typically, two full years of profitable business operations
- The business and principal owners must be in good financial standing with the US government, such as no delinquent taxes or not being in default on federal loans
How to Get SBA 8(a) Certification
The most challenging aspect of receiving SBA 8(a) certification is meeting the qualification requirements. Once you have determined your eligibility, becoming certified is a relatively simple process, although one that requires some patience.
The steps you will need to take to become SBA 8(a) certified are:
- Register your business at SAM.gov
- Complete the SBA 8(a) Certification application at certify.SBA.gov
- Receive a letter in the mail informing you of your acceptance or denial for the program
- If accepted, your business profile will then appear in the Dynamic Small Business Search indicating your approval and exit date for the program
SBA 8(a) certification is valid for up to nine years. During this time, you will be required to complete annual reviews to ensure your compliance with the program and maintain good standing. If you need assistance applying, there are SBA 8(a) consultants that specialize in helping small businesses with their applications.
SBA 8(a) Mentor-Protégé Program
One of the greatest advantages of participating in the SBA 8(a) certification program is the ability to take part in its mentor-protégé program. The mentor-protégé program partners newly certified small businesses with other small businesses that have been successful in the program. This partnership enables the newly certified business to receive guidance from another small business that has learned how to navigate the program.
Benefits of the SBA 8(a) Mentor-Protégé Program
Many businesses and people rely on the guidance of a mentor for career and personal growth. The SBA 8(a) Mentor-Protégé Program allows SBA 8(a) certified businesses to receive mentorship from another business that is more experienced in the program. This mentoring relationship can assist your small business in meeting its goals, understanding the contracting process, and guide you as you develop your business.
Aid in Meeting Goals
As part of the certification process, you will submit your business plan to the SBA for approval. A mentor can help you work toward the goals you laid out in your business plan and provide objective advice on how to reach those goals. Having someone that is not involved in the day-to-day operations of your business evaluate your progress can reveal hurdles and opportunities you may have overlooked.
Assistance Navigating the Contracting Process
Your mentor has experience navigating the SBA 8(a) contracting process. As such, they will be able to help guide you through the process and navigate any challenges you may encounter. Many small business owners find themselves overwhelmed by the nuances of government programs, and your mentor can help you overcome your concerns.
Guidance on Business Development
Working with someone who has been able to grow their own business successfully, as well as successfully work their way through SBA 8(a) contracts, provides an opportunity to learn about the development of your own business. Your mentor can help you vet your ideas for your business and give practical feedback regarding what worked for their business, and what didn’t.
SBA 8(a) Mentor-Protégé Eligibility Requirements
The primary eligibility requirement for the SBA 8(a) Mentor-Protégé Program is that your business has already been SBA 8(a) certified. Once you have received your certification, meeting the eligibility requirements to be a protégé is relatively simple.
To be eligible as a protégé, your business:
- Must be in good standing within the SBA 8(a) program
- Has at least six months remaining in the program
- Meets one of the following:
- Your business is still in the developmental stage of the program
- You have never received an SBA 8(a) contract
- The size of your business is less than half of the standard size for your corresponding North American Industry Classification System (NAICS) code
How to Apply for the SBA 8(a) Mentor-Protégé Program
The SBA must approve your SBA 8(a) Mentor-Protégé Program partnership. You and your mentor will need to draft a written agreement to submit to the SBA for approval. To be accepted by the SBA, your mentoring agreement must:
- Show how the mentor’s assistance will help you meet the goals established in your SBA-approved business plan
- List the mentor who is responsible for managing and implementing the mentor-protégé agreement
- State clearly that the mentor-protégé commitment is for at least one year
Once you have an SBA-approved mentor-protégé agreement, you and your mentor can form a joint venture and compete together for available SBA 8(a) contracts that have been set aside for small businesses.
SBA 8(a) certification can be a great way for socially or economically disadvantaged business owners to level the playing field and thrive. By having access to sole-source federal government contracts, and the mentor-protégé network, the SBA 8(a) Business Development Program provides opportunities that a disadvantaged small business owner may not be able to find elsewhere.
One of the most beneficial aspects of the SBA 8(a) program—aside from greater access to government contracts—is its mentor-protégé program. However, if you aren’t eligible for SBA 8(a) certification, there are other mentoring programs available. Small business owners who could benefit from a mentor/mentee relationship may want to consider seeking a mentor through their local Service Corps of Retired Entrepreneurs (SCORE) office.