Five 8(a) Certification Myths By: Mark Ryan & Todd Luttenegger

There are numerous reasons why businesses choose not to participate in the SBA 8(a) program. Procrastination, fear of government red tape, and lack of knowledge are a few. This week, I'll dispel some of the most common misconceptions about the SBA's 8(a) Certification Program.

?1.) Your company cannot become 8(a) certified unless it has been in operation for at least two years.

For businesses that need their 8(a) certification sooner than two years, there is a waiver process. The typical requirements are as follows:

a.The firm's owner has extensive industry experience.

b.The business has one tax return with revenue and an income.

c.The owner of the firm works full time for the applicant's concern.

d.Since its inception, the company has earned more than $150,000 in revenue.

e.All other 8(a) requirements are met by the company and its owner.

Note: A 2-year waiver is not needed if the company is only changing the organizational structure of the business. For instance, converting a sole proprietorship to a corporation.

2.) If your previous application was rejected by the SBA, your company cannot be certified.

The SBA rejects 70% of all applications completed by non-professionals largely in part due to lack of completeness. It is very common for a company to have its 8(a) applications rejected on the first try.

3.) The 8(a) certification really can't do that much for my business.

In 2018, 8(a) certified companies received $40 billion, which equates to more than $6 million in annual revenue per 8(a) firm.

4.) My company should be a well-established mid-tier business before I apply for the 8(a) certification.

The SBA allows 8(a) firms to enter into Joint Venture Partnerships and Mentor Protégé Arrangements with larger governmental contractors. These relationships can significantly increase a firm's growth rate by providing expertise, bonding, insurance, financial capabilities, and other assistance to the 8(a) firm.

5.) I must be a 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 8(a) given adequate supporting documentation showing the person holds themselves out to be part of that minority group.

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