| By :
Myra Cisse
To qualify for participation in the 8(a) Business Development Program, a business mustfirst meet SBA's Size Standards, prove Social Disadvantage and prove Economic Disadvantage. In another article I cover where to go to find the size standards for your business and the reason for those standards. In my experience, I've found that small business owners fall distinctly into one of two camps: 1. They have lots of income and assets and we are reviewing the tax returns and personal financialstatementwith a fine-toothed comb to ensure they are economically disadvantaged, or 2 They have no problem at all proving themselves economically disadvantaged because they withdrew retirement funds, drained savings accounts and borrowed home equity to get the business started and to keep it running. It is this second camp that I'll be addressing today. The reason is because there is a fine line between proving economic disadvantage and proving the "potential for success" that is the basis for approval for any business to be considered into the 8(a) Business Development Program. With the February 11, revisions that went into effect on March 14, 2011, there are now objective criteria to determine economic disadvantage based on personal income and total assets. Those criteria are: *Adjusted Net Worth - must not exceed $250,000 for initial eligibility or $750,000 for continued eligibility *Personal Income - must not exceed $250,000 (averaged over three years) for initial eligibility or $350,000 for continued eligibility *Total Assets - must not exceed $4MM for initial eligibility and $6MM for continued eligibility, IRA's are excluded from Net Worth and Total Asset calculations Proving that you are destitute is counter-productive to being approved for acceptance into the 8(a) Program. If you are flat broke, how can you successfully compete in the federal marketplace? How can you obtain the working capital you'll need to support a contract? The thing to remember is that Size Standards apply to your business, but Social and Economic Disadvantage are based on YOU, the 51% or better owner in the business. So in your narrative - one is required by the way - address your economic disadvantages based on each of the aforementioned criteria, but, more importantly, address the business' economic advantages. If you and another business have a strategic partnership whereby you provide services for them and they provide equipment for you, mention than. If your business has a vendor that provides you with generous terms, then outline those. And, of course, if the business had a working capital LOC with a bank, detail that account relationship. All of these things will prove to the certifying agency that you meet the requirements, yet you still have that all important "Potential for Success" in the 8(a) Business Development Program.
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