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 January 2020 there less than 7,000 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 20 years and over 3,000 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 1 – 8(a) Application Review
- For those who wish to complete the application on their own 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 2 – 8a 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 20 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.