Do you meet the SBA 8(a) Program Economic Disadvantage Qualifications?
One of the many requirements to become SBA 8a Certified is to be deemed to be economically disadvantaged at the time of your 8a Application submission. In order to meet this requirement you must:
1. The applicant(s) for 8a Certification must have an adjusted net worth of less than $750,000 at the time of their application submission.
Adjusted Net Worth = Personal Assets – Liabilities – [Equity in primary residence + ownership interest in business + IRA/Other Retirement Accounts subject to a penalty for early withdrawal]. All assets jointly held are split 50/50. If you are unsure what you Adjusted Net Worth is, use the Cloveer Adjusted Net Worth Calculator to determine if you are below the $750K limit. The online calculator offers specific advice and tips on determining some of the required amounts that must be reported to the SBA.
Tip: You will be required to submit supporting statements for all assets and liabilities so make sure that you provide amounts that can be corroborated by the SBA.
There may be ways to reduce your adjusted net worth below the regulatory limit. Please contact us for specific advice on your situation.
2. The applicant(s) for 8a Certification cannot have more than $6,000,000 in total assets at the time of their application submission.
Total Assets = All Personal assets – IRA/Other Retirement Accounts subject to a penalty for early withdrawal.
3. The applicant(s) for 8a Certification cannot have an Adjusted Gross Income (AGI) of more than $350,000, averaged over the last three tax years.
AGI = Your total income – any federal taxes you paid on behalf of the corporation or LLC (from distributions taken) – any income attributed to your corporation or LLC that is not distributed to you and essentially re-invested in the corporation or LLC.
If you are unsure if you meet this eligibility requirement, please contact us for a detailed review.