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7 out of every 10 businesses 8(a) Applications are denied by the SBA

Don’t get denied. Make sure you fully qualify for the 8(a) Program before first!

Unfortunately, many businesses try to prepare their own 8(a) application, without some sort of outside assistance, when a quick call to Cloveer could have saved them countless hours of of wasted time they spent putting together their application and the hassle of being denied by the SBA, causing a 1 year delay for re-application.

Here are just a few of issues we see on a daily basis that applicants are not aware of:

1. The applicant firm is earning more than 70% of its revenue with one single client causing economic dependence by the SBA.

2. The applicant has ownership in another business, resulting in a less than full-time devotion to the applicant business determination by the SBA.

3. The applicant firm has a potential affiliation with another firm resulting in the SBA requiring a size determination analysis, possible resulting in the business losing their small business size status.

At Cloveer, we conduct a free detailed pre-qualification interview with all of our clients.  We ask our clients the “Killer” questions that will let them know if they have an eligibility issue, unknown to them. The fact is that there are ways around a lot of the 8(a) eligibility issues.  We advise our clients on the pros and cons to any potential 8(a) eligibility issue and tell them when there is one that has no workarounds.

As you can see from our blog and website, www.cloveer.com, we provide more information about the 8(a) Program that all of our competitors. We want you every client to learn as much information about the SBA 8(a) Program as possible since they will be the one participating and using it as one of the tools to becoming a success. The more you know, the better decisions you can make before you apply and while you are in the 8(a) Program.

For more information on the 8(a) Program, please visit us at www.cloveer.com or call us at 813-333-5800.

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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.

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 or call us at 813-333-5800.

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8(m) WOSB and EDWOSB Program, who qualifies?

The Women-Owned Small Business Federal Contract Program provides equal access to federal contracting opportunities for women-owned small businesses (WOSBs) and economically disadvantaged women-owned small businesses (EDWOSBs).  The program allows contracting officers to set aside specific federal contracts for WOSBs and EDWOSBs in the 300 NAICS codes identified here.

The regulatory eligibility requirements for WOSBs and EDWOSBs are as follows:   1- The firm must be 51% owned and unconditionally controlled by women. 2- The women must be US citizens. 3- The women who control the business have at least the managerial expertise to run the firm. 4- No man or other entity has the ability to control the firm. 5- The women who own the firm manage it on a full-time basis.

EDWOSB certification adds the following requirements for the women controlling the business:

1- An adjusted net worth of less than $750,000. 2- A personal adjusted gross income of less than $350,000 per year over the last three years (i.e.:  a total of $1,050,000 for the past three years)

For more information on the SBA 8(m) WOSB and EDWOSB programs, or for assistance with your firm’s application, please visit us at www.cloveer.com or call 813-333-5800.

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8a Certification Advantages

8a certification is a valuable marketing vehicle for socially and economically disadvantaged small businesses to access the federal government marketplace. Initially, contracting under the 8a Program may seem more difficult than other methods. However, it is no more complicated than contracting under full and open competition through the sealed bid procurement process and it presents many advantages for both the government and the 8a contractor.

Advantages to the Government

A big advantage for government procurement personnel in selecting the 8a contracting method is that the agency does not have to solicit bids and may choose a specific 8a contractor to fulfill its requirements. For sole-source requirements under the competitive thresholds, the contracting agency can identify the 8a company to perform a contract by simply naming that company in an offering letter to the SBA. Of course this does not happen by itself. The 8a firm must actively self-market with the contracting agency or be introduced to the contractor through a referral. For competitive 8a requirements, the contracting agency does not have the same ability to choose a contractor, although the competition can be limited to eligible 8a companies within a certain geographic area or participation stage.

Another advantage for the government is that they can often get what they need faster by contracting though the 8a Program. This is because competitive requirements must be synopsized in FedBizOpps and the resulting solicitation must be open on the street for a minimum of 30 days. This process for full and open competition can take several months. 8a contracts have no synopsis requirements (except for competitive 8a contracts) and contracting agencies are not required to allow 8a firms 30 days to respond to the solicitation. Therefore 8a contracts can be finalized much faster.

Advantages to the 8a Contractor

The advantages to an 8a company are great. An 8a company can obtain federal contracts on a sole-source or limited competition basis much faster than in a full and open competition. For many small businesses, the costs of preparing proposals are very prohibitive. If the contract is a sole source, the 8a firm does not have to endure the costs associated with preparing a competitive proposal and participating in subsequent rounds of discussions with the contracting agency’s contracting officer.

Once the buying agencies are aware of the advantages of the 8a process and have a good experience with your 8a firm, they will most likely prefer to extend future contracts to you. The SBA plays a role in the beginning of the contracting process by verifying and approving the requirement for the 8a company. Once the requirement is in place, the 8a company and the federal agency deal directly with each other during negotiation of the contract and during performance of the contract.

Looking for help with Getting 8a Certified?

8a Application Accelerator

For our clients who are comfortable navigating the SBA 8a application process with a little less help than most, we have conceived an easy-to-use 8a Application Accelerator. As the nation’s #1 selling 8a application completion tool, we guarantee that no other program makes the process faster or easier. This interactive, web-based program takes you step-by-step through the creation and compilation of all the documentation necessary to submit your SBA 8a certification application. Moreover, the tool shows you how to organize your 8a application in the preferred SBA format. Every item and area within your 8a application will be identified and separated using our proven method, so your SBA reviewer can find, review and approve your SBA 8a application fast.

Other Services

For clients who are too busy running their businesses to complete the application themselves, we understand you don’t have time to look over the 8a checklist and that you would rather have a group of trusted 8a program experts more involved in your application. Cloveer offers other services including an 8a Application Review, and for those who would like their entire 8a application completed and approved in record time, a full 8a Application Completion Service.

No matter which option you choose, Cloveer guarantees that no other company will work harder or faster to assist you in getting your business SBA 8a certified. We have been assisting clients to obtain their 8a certification and maintain their 8a program eligibility for over 10 years. As such, we know the SBA 8a program regulatory requirements, 8a standard operating procedures and Office of Hearings and Appeal cases that affect the 8a program better than 99.9% of anyone else out there.

At Cloveer, we believe in treating you the way we want to be treated. We go the extra mile to make sure your experience with our company is outstanding. Contact us today to discover what Cloveer can do for you.

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8a Program Eligibility – The $250,000 Adjusted Net Worth Requirement

Among the many 8a business development program eligibility requirements, the applicant for 8a Certification must have a personal adjusted net worth of less than $250,000 at the time of 8a Application Submission.

What is the definition of Adjusted Net Worth?

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

Adjusted Net Worth = Assets – 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 split all assets and liabilities 50/50 unless 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 online calculator.

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.

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DIY 8(a) Certification Usually Means Certain Denial by the SBA

As the President of Cloveer, Inc. I speak to many clients who are interested in becoming 8(a) Certified. I would say that 7 out of every 10 people I talk to do not and cannot qualify for the 8(a) Program due to the strict 8(a) Program requirements. Many of these individuals have tried to prepare their own application without some sort of outside assistance and learn the hard way via denial by the SBA.

A few of these problems range from:

1. The applicant firm earning more than 70% of its total revenues from one single commercial client.

2. The applicant having an adjusted net worth that exceeds the SBA regulatory limit that cannot be lowered without violating the SBA transfer requirements.

3. Not being able to come up the required level of information and evidence required to prove social disadvantage to having an affiliation that may cause the SBA to find an unconditional control issue.

At Cloveer, we conduct a detailed free pre-qualification interview with all of our clients before we charge any fees or start preparing their 8(a) Application.  We ask our clients the “Killer” questions that will let us and more importantly them know if they have an eligibility issue, unknown to them. The fact is that there are ways around a lot of the eligibility issues but making changes may impact them beyond their comfort zone.  We advise our clients on the pros and cons to any potential eligibility issue and tell them when there is one that has no workarounds. Our feeling is that is it better for them to know now rather than later.

As you can see from our blog and website, www.cloveer.com, we provide more information about the 8(a) Program that all of our competitors. We want you to know as much information about the SBA 8(a) Program as possible since you will be the one participating and using it as one of the tools to becoming a success. The more you know the better decisions you can make before you apply and while you are in the 8(a) Program.

For more information on the 8(a) Program, please visit us at www.cloveer.com or call us at 813-333-5800.

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Tips to select the right consultant to prepare your 8a, HUBZone, WOSB or VetBiz Application.

1. Pick up the phone. Call them and speak to the actual person who will be preparing your application. 

You should be able to call them and speak directly to the individual(s) who will be responsible for preparing your application. At Cloveer, you can call and speak to the employee who will be responsible for preparing your application. They will answer any of your questions and let you know whether or not you are eligible to become certified into one of these programs at no cost. Call us at 813-333-5800 to get your questions answered.

2. Don’t choose your consultant solely on their price for services.

The old adage is true. You get what you pay for. If it looks to good too be true, it usually is.

3. Stay away from any consultant that offers you any type of guarantee.

The FAR prohibits any federal consultant to base any fee for their services contingent on certification.

4. Ask as many questions up front as possible. See if they actually know the rules and regulations of the program you want to get certified into. They should be able to answer your eligibility questions quickly and correctly.

Cloveer pre-qualifies all of its potential clients to make sure they meet all of the regulatory requirements.

5. Check the consultants Better Business Bureau report.

If they don’t have a profile established with the BBB, are not accredited or have negative feedback, this is  a sign of potential problems. Cloveer is an A Rated BBB accredited business with zero complaints.

6. Ask them for references you can personally speak to and look for a recent track record of success.

Cloveer has real references that are published on our website.

7. Look at their website to see if they provide more than just sales information.

Cloveer.com has an extensive FAQ section along with a comprehensive blog on getting certified.

8.  Make sure that the agreement provided for services to be rendered covers everything.

All services provided by Cloveer are on a fixed price basis so there will be no hidden charges.

For More information on getting your 8a Certified, HUBZone Certified, WOSB Certified or VETBiz Certified, call us at 813-333-5800 or visit www.cloveer.com