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.

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