8a Certification – The Economic Disadvantage Narrative Explained

Updated (August 29, 2016). As of August 24, 2016 you are no longer required to prepare and provide a Narrative Statement of Economic Disadvantage to the SBA as part of your 8(a) Application.

Here is the link to the Federal Register Rule that goes into effect on August 24, 2016 regarding the Narrative Statement of Economic Disadvantage.


Specifically, within it under item: 8(a) BD Application Processing (13 CFR 124.202, 124.203, 124.104(b), and 124.108(a))

In addition, SBA’s regulations provide that each individual claiming economic disadvantage must describe such economic disadvantage in a narrative statement, and must submit personal financial information to SBA. SBA believes that the written narrative on economic disadvantage is an unnecessary burden imposed on applicants to the 8(a) BD program. SBA’s determination as to whether an individual qualifies as economically disadvantaged is based solely on an analysis of objective financial data relating to the individual’s net worth, income and total assets. As such, this final rule eliminates the requirement that each individual claiming economic disadvantage must submit a narrative statement in support of his or her claim of economic disadvantage.

When you apply for SBA 8(a) Certification, the individual who is claiming disadvantaged status must be able to provide a narrative statement of economic disadvantage as just one of the many items to be included in their 8(a) Application.

I have spoken to countless clients who typically think this is the hardest part of their 8(a) Application and dread having to come up with, recall and reflect on how their ability to compete has been impaired due to discriminatory practices against them due to their identification as a member of their SBA designated group.




The Economic Disadvantage Narrative is a series of statements where you describe, in detail, your personal experiences stemming from actual or perceived prejudice or bias you have experienced. These experiences must have been occurred in American Society.



There are six areas that the SBA requires that you consider when providing experiences of actual or perceived prejudice or bias that have affected your business life are:

1 – Bonding

2 – Credit or Financing

3 – Licenses

4 – Leases

5 -Market Restrictions

6 – Underemployment/Unemployment

Note – Some of these areas may or may not apply to your business life. If they do not, skip to the next area. Remember these important facts about what you are about to describe, (1) you must be able to describe at least one major negative experience to convince the SBA that you have subjected to unfair economic disadvantage, and (2), connect it back to your distinguishing feature, whether it is race, gender, ethnicity, handicap or culture.

The SBA will not accept the justification that you have been discriminated against because you are a small business and “can’t compete with the big guys” or your credit was not good enough to get a loan or line of credit.




1. Have you or your company ever been denied a performance or any other type of bond needed to acquire or perform your work?

2. Was the level of bonding that you have received less favorable in amount and terms than that of other similar companies who are not socially disadvantaged?

Credit or Financing:

1. Have you or your company ever been denied the required credit or financing needed to acquire necessary equipment, etc. or to finance the ongoing operations of your firm?

2. Were the terms (e.g. interest rate, collateral, etc.) of this financing less favorable than those received by similar companies who are not socially disadvantaged?


1. Have you or your company ever been denied a license required by you to conduct business?

2. Have you or your firm ever had a necessary license revoked?


1. Has your firm ever been denied a real or tangible property lease?

2. Were the terms of your leases less favorable than those received by similar companies who are not socially disadvantaged?

Market Restrictions:

1. Have you or your firm ever been denied access to a client or to bidding on a contract opportunity?

2. Has your firm ever been rejected for a business opportunity on terms that were different than those provided to other similar firms that were not socially disadvantaged?


1. Have you ever been denied employment or advancement opportunities that have had a negative impact on your economic situation?

2. Have you ever been discharged, fired or downsized on terms that were different than those provided to other equivalently qualified individuals?


If you answered YES to any of the questions above or have ever experienced any other form of perceived prejudice or bias in the areas above you will need to answer the questions below:

What were the dates or periods of time over which the above prejudice or bias occurred? (You must be as specific as possible (e.g. January, 2013, January through March, 2010, Fall of 2008, etc.)

Who are or were the person(s) and/or entities (i.e., organizations) involved and their respective positions or titles (You must be as specific as possible (e.g. first and last name, title, name of company. If you cannot remember exactly, please provide as much information as possible and state to the best of your recollection. Do not make up any names.)

Identify and describe the specific instances that you claim represent the substantial and chronic prejudice or bias you have identified above? Be very specific, using the “street language” that may have been used.

What specific actions are being taken or were taken by you to overcome the effects of the prejudice or bias experienced by you or your company? (e.g. filed lawsuit, threatened lawsuit, wrote letter/email requesting reasoning, etc.)

Identify and discuss the specific negative impact (economic, loss of professional development, damage to your personal or company reputation) on you and/or your firm on the entry or advancement in the business world because of this disadvantage experienced by you. (You must be as specific as possible, e.g.  the loss of revenue, profits or salary in actual dollar amounts.)

What type of physical evidence will you or can you provide to substantiate your claims of prejudice or bias? e.g. court or administrative findings, affidavits, documents related to rejected bonding, contemporaneous records memorializing meetings, conversations, negotiations, telephone calls,  a letter or two from a co-worker that observed the above incident)

What additional facts do you consider relevant to claiming and/or evidencing the prejudice or bias that you claim? (For example, were there other incidents involving others who may have been subjected to the same types of prejudice or bias as you, if so, be specific about the name of the company, individuals, titles, dates, things said/done, minority/non-minority, etc

For more information on the SBA 8(a) Program, visit cloveer.com or call 813-333-5800. Over 2,000 successful 8(a) Applications .