Don;t Miss Out On End of FY 8(a) Contracts

Do you have a potential or upcoming 8(a) Contract opportunity before the end of the Federal Governments FY (September 30, 2015). It is a known fact that a large portion of 8(a) contracts are awarded in the last three months of the Federal Government’s fiscal year.

Waiting to start the process of getting 8(a) Certified in late summer (July or August) is a sure way to miss out on being able to bid or to be awarded an end of fiscal year 8(a) Contract. It takes approximately 3 months for your 8(a) Application to be reviewed and processed by the SBA.

Now (May 2015 or at the latest, June 2015) is the time to get your 8(a) Application completed and submitted to the SBA if you do not want to miss out on 8(a) Contracts this fiscal year.

Need assistance with your 8(a) Application? With 15 years and over 2,000 successful applications under our belt, we can assure you that no matter which option you choose, Cloveer will work harder and faster to get your business SBA 8a certified.  Contact us today at 813-333-5800 or visiting our website at www.cloveer.com to discover what Cloveer can do for you. We also offer these options for further assistance in completing your 8(a) Application.

Option 18(a) Application Accelerator

  • This interactive, web-based program is designed to guide you through the SBA 8(a) application process with ease.  The program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8(a) application. Moreover, it shows you how to organize your 8(a) application in the preferred SBA format.  As the nation’s #1 selling 8(a) application completion tool, we guarantee that no other program makes the process faster.

Option 28(a) Application Review

  • For those who wish to complete the application on their own, either using the 8(a) Application Accelerator or by other means, we offer an 8(a) Application Review service.  Here, one of our 8a program experts will review your entire application, checking it for missing documents and potential eligibility issues.  We will then advise you as to how best to modify your application to ensure it will be approved an SBA reviewer.

Option 38a Application Completion Service

  • The majority of our clients however, prefer a little more of a hands-on approach.  They recognize the expertise we have accumulated in the over 15 years we’ve been assisting clients obtain 8(a) certification, and want us to put it to use for them.  If you opt for our 8(a) Application Completion Service, we will work one-on-one with you to ensure that your 8(a) Application is 100% complete and compliant so the SBA can review and accept it the first time.

8a Certification: The most overlooked eligibility issues.

Getting successfully 8(a) Certified can be very difficult. The latest statistics show that only 2 out of every 10 self-prepared 8(a) Applications result in successful 8(a) Certification by the SBA.

In fact, as of April 29. 2015 there are only 6,659 firms that are active 8(a) participants according to the the SBA Dynamic Small Business Search System. Don’t go it alone. Cloveer is here to help should you need assistance with your 8(a) Application.

Here are just a few of the most overlooked eligibility issues that come up from clients we speak that assumed they qualified for the 8(a) Program.

1. Economic Dependence.

No where in the SBA regulations does it clearly spell out that a firm must have multiple active clients to get successfully 8(a) Certified nor does it speak specifically to the economic dependence rules. The only mention in the Code of Federal regulations where it discusses economic dependence is within CFR 13; part 121 – 124.103 – How does the SBA determine affiliation. Here is an except from the current regulations:

(f) Affiliation based on identity of interest. Affiliation may arise among two or more persons with an identity of interest. Individuals or firms that have identical or substantially identical business or economic interests (such as family members, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships) may be treated as one party with such interests aggregated. Where SBA determines that such interests should be aggregated, an individual or firm may rebut that determination with evidence showing that the interests deemed to be one are in fact separate.

The simple fact is that the SBA will look at the totality of your circumstances to determine whether economic dependence exists. Read our blog article on Do you meet the 70% Economic Dependency Rule for detailed information on whether or not you will be found to be economically dependent by the SBA.

2. Outside Ownership in Any Other Business

No where in the SBA regulations does it clearly spell out that you cannot have ownership interest in any other business to get 8(a) Certified.

The rule is that the applicant must devote full-time to the 8(a) Applicant business without any outside employment. When you have ownership interest in an another business the SBA will most likely conclude that you are not devoting full-time to the 8(a) Applicant business even if you are not materially participating in this outside business.

The only exception by the SBA is if this outside business is an LLC for the purposes of solely holding or investing in real estate. The tax returns for this other entity must clearly show that this is the sole purpose of the business.

3. Applying for a Waiver to overcome the fact that the business has not been business for two full years.

No where in the SBA regulations does it indicate that your firm must have at least 1 (one) year of revenue earned in it primary NAICS shown on a tax year to even apply for a waiver. If you are start-up and have not filed at least one tax return showing sufficient revenues (@100K or more) on it do not even think about applying for the 8(a) Program. You will most likely be denied by the SBA for not meeting their “Potential for Success” requirement.

Read our blog article on How to get 8(a) Certified if your firm has been in business for less than two years for more information.

These are just a few of the most overlooked eligibility issues. For more, just give us a call at 813-333-5800. We would be pleased to take you through a FREE and very detailed pre-qualifying interview that will help identify any potential show stoppers.

Need assistance with your 8(a) Application? With 14 years and over 2,000 successful applications under our belt, we can assure you that no matter which option you choose, Cloveer will work harder and faster to get your business SBA 8a certified.  Contact us today at 813-333-5800 or visiting our website at www.cloveer.com to discover what Cloveer can do for you. We also offer these options for further assistance in completing your 8(a) Application.

Option 18(a) Application Accelerator

  • This interactive, web-based program is designed to guide you through the SBA 8(a) application process with ease.  The program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8(a) application. Moreover, it shows you how to organize your 8(a) application in the preferred SBA format.  As the nation’s #1 selling 8(a) application completion tool, we guarantee that no other program makes the process faster.

Option 28(a) Application Review

  • For those who wish to complete the application on their own, either using the 8(a) Application Accelerator or by other means, we offer an 8(a) Application Review service.  Here, one of our 8a program experts will review your entire application, checking it for missing documents and potential eligibility issues.  We will then advise you as to how best to modify your application to ensure it will be approved an SBA reviewer.

Option 38a Application Completion Service

  • The majority of our clients however, prefer a little more of a hands-on approach.  They recognize the expertise we have accumulated in the over 14 years we’ve been assisting clients obtain 8(a) certification, and want us to put it to use for them.  If you opt for our 8(a) Application Completion Service, we will work one-on-one with you to ensure that your 8(a) Application is 100% complete and compliant so the SBA can review and accept it the first time.

How to get 8(a) Certified if your firm has been in business for less than two years.

The SBA may waive the 2 year requirement if you meet each of the following conditions:

Condition 1: The individual or individuals upon whom eligibility is based have substantial business management experience.

In order to prove that the applicant and other key individuals of the business concern meet this condition, the individual or individuals resumes and past employment history must exhibit significant management experience either;

a. previously employed performing management duties (VP, CFO, President, Director) with a firm that operated in the primary industry or NAICS code  that the business concern is seeking 8(a) Certification for, or;

b. has owned and operating a similar business concern in the past.

In addition, the applicant and other key individuals of the business concern must also have the required technical capabilities, if required in your business situation. The applicant must also hold all requisite licenses and professional certifications within a firm who have been in business for less than two years.

Condition 2: The applicant has demonstrated technical experience to carry out its business plan with a substantial likelihood for success if admitted to the 8(a) BD program.

In order to prove that you meet this condition, you must provide evidence of a business plan or some semblance of a business plan that:

a. Details your Marketing/Sales, Products/Services, Management/Organizational/Personnel and Finance goals and demonstrated progress towards the goals you specified.

b. Outlines any unique or special technical expertise that you and your team have and how you believe it will sustain your business during its early formative years.

You must also provide copies of independent reference letters from your clients, directly addressed to the applicant, that establish successful contract performance.

Condition 3: The applicant has adequate capital to sustain the operations and carry out its business plan as a participant.

In order to prove you meet this condition, your business must have sufficient working capital. Sufficient working capital is usually defined as a minimum of 3 months worth of liquid working capital immediately available. Your business bank account (s) statements must show that you have 3 times your monthly burn rate, at a minimum. In lieu of cash, a business line of credit may be substituted.

You should also describe your general payment terms and what actions your business takes to expedite the timely collection of receivables.

Condition 4: The applicant has a record of successful performance on contracts from governmental or nongovernmental sources in its primary industry category.

In order to prove you meet this condition you must provide proof of a minimum of at least two completed contracts showing operating revenues earned in the primary industry (NAICS code) in which it is seeking 8(a) Certification. The contracts must meet the following minimum conditions:

a. Show that you billed and received a minimum of $50,000 – $100,000. You must have at least one tax return filed for the business that shows revenue earned in the primary NAICS code. This being said, you cannot apply for the waiver if your business just started up and has not filed a tax return yet.

b. The contracts must be with different entities and show that not more than 70% of the total operating revenue earned is with one single entity. The 70% rule does not apply if your direct billable client is a federal, state or local government agency.

Copies of all paid invoices and business bank account statements to support the operating revenue earned and collected from the contracts will need to be provided.

If you have a potential federal client that may want to procure your products or services, should you become 8(a) certified, you should provide letters of noncommittal as additional evidence.

In addition, the SBA may require proof that the government previously procured and is likely to procure the types of products or services offered by your business. Proof can be provided in the form of fbo.gov or FPDS.gov printouts of previous procurements that have occurred and are similar in nature to your products or services offered

Condition 5: The applicant has, or can demonstrate its ability to timely obtain, the personnel, facilities, equipment, and any other requirements needed to perform contracts as a Participant.

In order to prove you meet this condition you must provide an explanation of current and future personnel requirements, facilities and equipment.

For personnel requirements you should detail the current number of employees you have, any future hiring and how you will recruit and attract additional employees including timelines for hiring and any special relationship that exist with recruiters, personnel agencies and temporary agencies.

For facilities requirements you should detail your current office space, any future locations or expansions, how you will lease or purchase new office space including any relationships that exist with local commercial real estate brokers.

For equipment requirements you should detail your current equipment owned or leased that is needed to perform on contracts, any future equipment needed along with where you will lease or purchase and how you will finance or lease the equipment needed.

If you want more information on becoming 8(a) Certified, please visit http://www.cloveer.com/8aprogram.html or call us at 813-333-5800.

Do you meet the 70% Economic Dependency Rule?

Economic Dependence is a significant obstacle to the eligibility of many applicants desiring to gain 8(a) Certification for their firms. In fact, it is currently the issue for which we have to turn the greatest number of potential applicants away, until the issue is resolved.

Here is a simple flow chart that will help you determine if economic dependency applies to your business. Click on the chart below to see a larger image.

Economic Dependency Chart

Economic Dependency Chart

Need assistance with your 8(a) Application? With 14 years and over 2,000 successful applications under our belt, we can assure you that no matter which option you choose, Cloveer will work harder and faster to get your business SBA 8a certified.  Contact us today at 813-333-5800 or visiting our website at www.cloveer.com to discover what Cloveer can do for you. We also offer these options for further assistance in completing your 8(a) Application.

Option 18(a) Application Accelerator

  • This interactive, web-based program is designed to guide you through the SBA 8(a) application process with ease.  The program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8(a) application. Moreover, it shows you how to organize your 8(a) application in the preferred SBA format.  As the nation’s #1 selling 8(a) application completion tool, we guarantee that no other program makes the process faster.

Option 28(a) Application Review

  • For those who wish to complete the application on their own, either using the 8(a) Application Accelerator or by other means, we offer an 8(a) Application Review service.  Here, one of our 8a program experts will review your entire application, checking it for missing documents and potential eligibility issues.  We will then advise you as to how best to modify your application to ensure it will be approved an SBA reviewer.

Option 38a Application Completion Service

  • The majority of our clients however, prefer a little more of a hands-on approach.  They recognize the expertise we have accumulated in the over 14 years we’ve been assisting clients obtain 8(a) certification, and want us to put it to use for them.  If you opt for our 8(a) Application Completion Service, we will work one-on-one with you to ensure that your 8(a) Application is 100% complete and compliant so the SBA can review and accept it the first time.

 

Important Fact about 8(a) Adjusted Net Worth Requirements

As you may be aware, the applicant for 8(a) Certification must have an adjusted net worth of less than $250,000 to get 8(a) Certified. However, here is an important fact that you must also consider.

If the applicant is married, the SBA will consider the spouse’s financial situation also in determining whether the applicant’s access to capital and credit is diminished where the spouse has a role in the business (e.g. an officer, employee or director) or has lent money to, provided credit support to, or guaranteed a loan to the business. See CFR part 13: §124.104   Who is economically disadvantaged? for complete rules on 8(a) Economic Disadvantage requirements.

What is the definition of Adjusted Net Worth?

The algorithm used to determine Adjusted Net Worth for 8a Certification purposes is:

Adjusted Net Worth = Personal Assets – Personal Liabilities – [Equity in primary residence + value of ownership interest in applicant business + value of any IRA/401(k) or other retirement account that is subject to a penalty for early withdrawal]

If the applicant is married and the asset or liability is jointly held, you split the value 50/50. If the applicant is married and lives in a community property state, you only split assets and liabilities 50/50 if you have a transmutation or pre/post nuptial agreement that states otherwise.

How can I determine my Adjusted Worth?

You can easily determine your Adjusted Net Worth by using our Adjusted Net Worth Calculator.

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What is required to be submitted within the 8a Application to prove the applicant’s Adjusted Net Worth?

Each applicant, and their spouse, must submit a separate SBA Form 413, Personal Financial Statement. Along with the SBA Form 413 you must also submit statements for each asset or liability supporting the amounts reported. These statements cannot be any older than 30 days at the time of 8a Application submission.

Are there any ways to reduce an applicant’s Adjusted Net Worth below the $250,000 threshold?

For more information, contact us.

*Important* You cannot transfer an asset out of the applicant’s name within two years of the time your apply for 8a Certification for less than fair market value. Doing so will result in the full amount of the asset being re attributed back to the applicant.

Active SBA 8(a) Certified Firms as of July 1, 2014 by Location

There are 7,078 active SBA 8(a) Certified firms as of July 1, 2014. Below is an info graphic showing the location by state and number of active SBA 8(a) Certified firms. The source of this information is the SBA Dynamic Small Business database.

8(a) Certified Firms as of July 1, 2014

8(a) Certified Firms as of July 1, 2014

The top five states with 8(a) Certified Firms are:
1. Virginia – 880
2. California – 789
3. Maryland – 668
4. Texas – 605
5. Florida – 441

The top five states or US territories with the lowest number of 8(a) Certified firms are:
1. Vermont – 2
2. U.S. Virgin Islands – 3
3. Rhode Island – 7
4. Delaware – 9
5. North Dakota  – 10

This information is provided by Cloveer.com.

Cloveer provides products and services on the SBA 8(a), HUBZone, 8(m) and VA VetBiz programs.

Have additional Questions? or want to get started on your SBA 8(a) Application?

With 14 years and over 2,000 successful applications under our belt, we can assure you that no matter which option you choose, Cloveer will work harder and faster to get your business SBA 8a certified.  Contact us today at 813-333-5800 or visiting our website at www.cloveer.com to discover what Cloveer can do for you. We also offer these options for further assistance in completing your 8(a) Application.

Option 18(a) Application Accelerator

  • This interactive, web-based program is designed to guide you through the SBA 8(a) application process with ease.  The program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8(a) application. Moreover, it shows you how to organize your 8(a) application in the preferred SBA format.  As the nation’s #1 selling 8(a) application completion tool, we guarantee that no other program makes the process faster.

Option 28(a) Application Review

  • For those who wish to complete the application on their own, either using the 8(a) Application Accelerator or by other means, we offer an 8(a) Application Review service.  Here, one of our 8a program experts will review your entire application, checking it for missing documents and potential eligibility issues.  We will then advise you as to how best to modify your application to ensure it will be approved an SBA reviewer.

Option 38a Application Completion Service

  • The majority of our clients however, prefer a little more of a hands-on approach.  They recognize the expertise we have accumulated in the over 14 years we’ve been assisting clients obtain 8(a) certification, and want us to put it to use for them.  If you opt for our 8(a) Application Completion Service, we will work one-on-one with you to ensure that your 8(a) Application is 100% complete and compliant so the SBA can review and accept it the first time.

 

8(a) Program. Ownership vs. Control

Control is not the same as ownership. For example a disadvantaged individual may own 51% of the business that is applying for 8(a) Certification but they may be found to not unconditionally control the company by the SBA.

As defined by the SBA in CFR 124.106, the SBA regards control as including both the strategic policy setting exercised by boards of directors and the day-to-day management and administration of business operations of the business.

In order to be found to control the business, here are the following requirements.

1. The disadvantaged individual must manage the daily business operations (Except for concerns owned by Indian tribes, ANC’s, NHO’s or CDC’s)

2. The disadvantaged individual must have managerial experience of the extent and complexity to run the business.

3. The disadvantaged individual need not have the technical expertise or possess the required license to be found to control the business if he or she can demonstrate that he or she has ultimate managerial control over those who possess the required license or technical expertise. However – where a critical license is held by a non-disadvantaged individual have an equity interest in the business, the non-disadvantaged individual may be found to control the business.

4. The disadvantaged individual must work full-time in the business, without any outside employment. In addition, the disadvantaged individual must devote full-time during the the normal working hours of the business. If the disadvantaged individual works in a wholly owned subsidiary of the business this full-time devotion may be considered to meet the requirement of full-time devotion.

5. The disadvantaged individual must hold the highest officer position in the business. (Usually President or CEO)

6. The disadvantaged individual must be physically located in the USA.

7. If the business is a partnership, the disadvantaged individual must serve as the the general partner with control over all partnership decisions.

8. If the business is a limited liability company, the disadvantaged individual must serve as management members with control over all decisions of the LLC.

9. If the business is a corporation, the disadvantaged individual must control the Board of Directors. See CFR 124.106 for Board of Director Control requirements.

10. No non-disadvantaged individual or immediate family member may be a former employer or principal of any disadvantaged individual, unless the relationship between the former employer or principal and the disadvantaged individual does not give the former employer actual control or the potential to control the business and such relationship is in the best interest of the business.

11. The disadvantaged individual must be the highest compensated individual.

12. Non-disadvantaged individuals who transfer the majority ownership or control of the firm to an immediate family member, within two years prior to the 8(a) Application and remain involved in the firm are presumed to control the firm.

13. The disadvantaged individual must be a guarantor of any critical financing or bond, if required.

14. Business relationships that exist with non-disadvantaged individuals or entities which cause economic dependence will cause a control issue.

Have additional Questions? or want to get started on your SBA 8(a) Application?

With 14 years and over 2,000 successful applications under our belt, we can assure you that no matter which option you choose, Cloveer will work harder and faster to get your business SBA 8a certified.  Contact us today at 813-333-5800 or visiting our website at www.cloveer.com to discover what Cloveer can do for you. We also offer these options for further assistance in completing your 8(a) Application.

Option 18(a) Application Accelerator

  • This interactive, web-based program is designed to guide you through the SBA 8(a) application process with ease.  The program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8(a) application. Moreover, it shows you how to organize your 8(a) application in the preferred SBA format.  As the nation’s #1 selling 8(a) application completion tool, we guarantee that no other program makes the process faster.

Option 28(a) Application Review

  • For those who wish to complete the application on their own, either using the 8(a) Application Accelerator or by other means, we offer an 8(a) Application Review service.  Here, one of our 8a program experts will review your entire application, checking it for missing documents and potential eligibility issues.  We will then advise you as to how best to modify your application to ensure it will be approved an SBA reviewer.

Option 38a Application Completion Service

  • The majority of our clients however, prefer a little more of a hands-on approach.  They recognize the expertise we have accumulated in the over 14 years we’ve been assisting clients obtain 8(a) certification, and want us to put it to use for them.  If you opt for our 8(a) Application Completion Service, we will work one-on-one with you to ensure that your 8(a) Application is 100% complete and compliant so the SBA can review and accept it the first time.