Stock Certificates and Ledger Guide: What you need to provide and tips for compliance.

Our 2017 Stock/Membership and Ledger Guide will assist in the preparation and 100% completion of your Stock or Membership Certificates and Ledger for your SBA 8(a) Application. This downloadable guide is $79.95. Click on the Buy Now button below to purchase the guide and download now. This guide will not only show you how to properly prepare your Stock/Membership Certificates and Ledger but will save you countless hours of trying to figure out how to be compliant with these SBA 8(a) application requirements and possible endless back and forth or long delays of the processing of your 8(a) application by the SBA. The guide includes the following information:

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  • Who needs to provide Stock/Membership Certificates and Ledger within the SBA 8(a) Application documentation.

Detailed tips for compliance including:

  • What to do if you have never prepared the required Stock/Membership Certificates and ledger in the past.
  • How to ensure they are completed properly so they correspond with the ownership information presented to the SBA.
  • What to do if you have lost any previous issued  Stock/Membership Certificates.
  • How to properly complete every area of the Stock/Membership Certificates and Ledger  to alleviate any questions by the SBA.

Need assistance with your 8(a) Application? With 15 years and over 2,000 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 18(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 28a 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 15 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.

SBA 413 Form Guide: How to Properly Complete the SBA 413 (Personal Financial Statement) for your 8(a) Application

Our 2017 SBA 413 Form (Personal Financial Statement) Guide will assist in the preparation and 100% completion of the SBA 413 Form for your SBA 8(a) Application. This downloadable guide is $99.95. Click on the Buy Now button below to purchase the guide and download now. This guide will not only show you how to properly prepare the SBA 413 but will save you countless hours of trying to figure out how to properly complete the SBA 413 form and possible endless back and forth or long delays of the processing of your 8(a) application by the SBA. The guide includes the following information:
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SBA 413 Intro

SBA 413 Form

  • What is the SBA 413 form and how to properly calculate your Adjusted Net Worth to prove the applicants meet the $250,000 Adjusted Net Worth Requirement.
  • Who needs to complete an SBA 413 form(s) within the SBA 8(a) Application and tips on whether the spouse’s Adjusted Net Worth may be counted too.
  • The exact supporting account statements you need to have in front of you to complete every area of the SBA 413 form including tips on what each statement must contain to be compliant and to how to properly name each supporting statement for upload to certify.sba.gov so the SBA can validate the values reported.
  • How to access the SBA 413 form(s) through the SBA GLS system.
  • How to properly complete every item in the SBA 413 form including every Asset, Liability and Source of Income input required so your form is completed properly to alleviate any questions by the SBA. (See Below):

Assets Section:
a. Cash on Hand and in Banks
b. Savings Accounts
c. IRA and Other Retirement Accounts (Including tips on certifying these accounts as legitimate and what other documents you need to provide other than the current statements)
d. Roth IRA Accounts
e. Accounts and Notes Receivable
f. Life Insurance – Cash Surrender Value
g. Stocks and Bonds
h. Real Estate (Including how to find the value and what exact documents you need to provide
i. Automobile Present Value (including how to find the value)
j. Other Personal Property
k. Other Assets
l. Mutual Funds
m. Applicant’s Business Equity (Including how to determine this value)
n. Equity in Other Firms

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Example of Content in Guide

Liabilities Section:
a. Accounts Payable
b. Notes Payable to Banks and Others (What goes in this section and what does not)
c. Installment Account – Auto
d. Installment Account – Other
e. Loan on Life Insurance
f. Mortgages on Real Estate
g. Unpaid Taxes
h. Other Liabilities

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Example of Guide Content

Income and Contingent Liabilities Section:
a. Salary
b. Net Investment Income
c. Real Estate Income
d. Other Income

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Example of Guide Content

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 = Personal Assets – Personal 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 only split assets and liabilities 50/50 if 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 Adjusted Net Worth Calculator.

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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.

15 8(a) Application Killers

Spending the time upfront to ensure that your firm meets all of the eligibility requirements for 8(a) Certification can save you countless hours of frustration, the expense of putting the application together incorrectly and the difference between obtaining formal 8(a) Certification or not.

Below are just 15 of the 8(a) Application “Killers”. These will immediately tell you whether you have an issue that may prevent you from qualifying for 8(a) Certification.

1. The applicant (51% of more owner) must be a US Citizen when they apply.

2. The applicant must devote full time to the business concern that is applying for 8(a) Certification when they apply. This means the applicant must work at least 40 hours per week in the business concern without any outside employment.

3. The applicant must hold the highest management position within the business concern. Generally this is the CEO, President or Managing Member.

4. The applicant must be able to demonstrate that they are the highest compensated. Generally the SBA will deny your 8a application if you cannot demonstrate the applicant currently is the highest compensated or there is a very good reason why they have elected not to be.

5 The applicant must have an adjusted net worth of less than $250,000 at the time they apply. Adjusted net worth = Personal Assets – Personal liabilities – (Equity in primary residence + value of ownership interest in business concern + IRA/401(k) or Other Retirement Accounts subject to a penalty for early withdrawal). To determine if your adjusted net worth is lower than $250,000 use our adjusted net worth calculator.

6. The applicant’s AGI (Adjusted Gross Income) cannot be more than $250,000 averaged over the last three tax years.

7. The applicant must generally hold all licenses or professional certifications required to operate the business concern. If they do not, another equity owner cannot be the holder of the required licenses.

8. If the applicant has ownership in another business concern, other than the business concern that is applying for 8(a) Certification, the SBA may very well likely determine that you do not devote full time and therefore deny your 8(a) application. The only exception would be for ownership in an LLC for holding, managing and protecting real estate. There are ways to solve this issue and they vary depending on your unique condition.

9. The applicant cannot be on probation or parole. If the applicant has been arrested in the past it does not automatically deny them unless they were convicted of a specific crime. Having an arrest, regardless of how long ago, will severely delay the review of your 8a Application by at least 90 days.

10. The business concern must have been in business for 2 full years with evidence of reasonable revenues on its last two tax returns in the industry it is seeking 8(a) Certification for.  If it has not, you must seek a waiver and meet the 5 conditions set by the SBA to overcome this condition. Click here for detailed information on each of the 5 conditions.

11. The business concern and the applicant cannot have any delinquent tax filings or have any unpaid Federal, State or local obligations at the time of application. This condition can be overcome by filing the proper extension for delinquent taxes or by providing evidence of a current re-payment arrangement for unpaid Federal, State or local obligations.

12. The business concern must be at least 51% directly owned by the applicant and must be defined as a “Small Business” by the Federal Government. Your primary NAICS code, gross sales and sometimes the number of employees define your size standard that the SBA will base its determination on.. The business concern must also be a for-profit business and cannot be classified as a broker or be a subsidiary of another business concern.

13. The business concern’s current financial statements must exhibit positive net income, positive net equity and sufficient working capital at the time of 8(a) application submission.

14. The business concern must not earn more than 70% of its total revenue with one single client, within the last 12 months. This does not apply to a business concern if its direct billing client is a Federal or State Government.

15. The applicant or business concern cannot have previously participated as an 8(a) participant. The applicant cannot have any immediate family members who are current or previous participants in the 8(a) Program that are or were affiliated.

These are just 15 of the “Killers” that can potentially prevent your 8(a) Certification application from being successful. There are additional “Killers” and other areas that you should be concerned with prior to making the decision on whether you fully qualify for 8(a) Certification. If you have additional questions or would like to discuss your specific business situation, please call us at 813-333-5800 or visit www.cloveer.com.

Cloveer, Inc. pre-qualifies all of its full service clients prior to preparing their 8(a Certification Application. With over 2,000 successful clients to date. Read some of our testimonials.

2 ways to reduce your Adjusted Net Worth below $250,000.

Is your Adjusted Net Worth (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] ) above the $250,000 SBA regulatory threshold limiting your participation in the SBA 8(a) Program?

Not sure what your true Adjusted Net Worth is? Use the Cloveer online adjusted net worth calculator to determine it.

If your Adjusted Net Worth is above the regulatory limit, here are 2(two) possible ways to reduce your Adjusted Net Worth without violating the SBA regulations.

1. Pay down your primary mortgage or HELOC (Home Equity Line of Credit) from your personal checking, savings, stocks or mutual funds. Since the value of your primary residence, mortgage and HELOC do not factor into determining your Adjusted Net Worth, paying down your primary mortgage or HELOC can help reduce your Adjusted Net Worth.

2. Invest funds from your checking, Savings, Stocks or Mutual Funds into the business. You may be allowed to infuse personal funds into the business if your firm meets certain requirements. To determine whether this will be allowable in your unique case, an RMA (Risk Management Association) analysis must be performed.

We can perform an RMA analysis to see whether or not the SBA would allow you to infuse personal funds into additional Paid-In Capital. This may help drive down your Adjusted Net Worth to below the regulatory limit of $250,000.00. The keyword is “Allow”. The SBA will allow you to infuse additional funds into the business concern if it is found to be economically disadvantaged, by SBA Standards, at the time of the infusion of Additional Paid in Capital. In order for the SBA to determine that the business concern is  found to be economically disadvantaged it utilizes data from the firm Risk Management Association (RMA) and its compiled figures/ratios to see if your firm exceeds 4 or more of the 7 figures/ratios to be discussed below. These figures/ratios compiled from RMA basically allow the SBA to compare your firm to other similar firms which are operating within the same NAICS code and also are within the same sales range (e.g. 0-1MM)  against the following 7 figures/ratios:

1. Total Assets

2. Current Ratio (Current Assets/Current Liabilities)

3. Debt/Net Worth Ratio

4. Net Worth

5. Net Sales

6. Pre-Tax Profit

7. Sales/Working Capital Ratio

For more ways to reduce your Adjusted Net Worth or if you have questions about the SBA 8(a) Program, please call us at 813-333-5800 or visit www.cloveer.com.

SBA 8(a) Certification Requirements

Though there is much more to 8a certification than meeting a few simple criteria, there are in fact some basic requirements that must be met to consider applying. If you are ready to begin the 8a application process, you will need to organize a lot of information. We at Cloveer know this can be daunting, so we’ve compiled an 8a certification checklist to help you make sure you’re on the right track. Take a look at this 8a checklist to see if you meet the basic eligibility requirements to qualify to apply for the 8a certification.

  • Are you a U.S. citizen?
  • Do you work full-time in the business without any outside employment?
  • Do you hold the top management position of the business?
  • Are you the highest compensated individual within the business?
  • Do you have an adjusted net worth of less than $250,000?
  • Did you as the applicant make less than $250,000 averaged over the last three tax years?
  • If licenses are required to operate your business, do you hold them?
  • Are you not currently on probation or parole, if you have ever been arrested?
  • Has the business been operating with revenues for 2 full years as shown on its last two tax returns?
  • Have you or your business satisfied any unpaid, federal, state or local obligations?
  • Do you own at least 51% of the business which is applying?
  • Does the business that is applying exhibit potential for success?
  • Does the business earn 70% of its revenue from more than one client?
  • Would you be a first time participant in the SBA 8a program?
  • Do you own a small business?

If you answered “Yes” to each of the questions on the above 8a certification checklist, congratulations; you meet the basic requirements for 8a qualification. The next step in your 8a application is compiling your actual application documentation. As there is quite a bit of paperwork involved in this part of the application.

For our 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.

Do you meet the SBA 8(a) Program Economic Disadvantage Qualifications?

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 $250,000 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 $250K 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 $4,000,000 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 $250,000, 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.

4. The applicant(s) for 8a Certification must be able to produce a narrative statement of economic disadvantage that details at least one specific instance of actual or perceived prejudice or bias that can be directly attributed back to their distinguishing feature (Race, Ethnicity, Culture, Handicap, Gender, etc).

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. If you are not a member of one of the SBA designated groups, you still must submit a Social Disadvantage Narrative though

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

https://www.federalregister.gov/articles/2016/07/25/2016-16399/small-business-mentor-protg-programs

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.

View our sample economic and social narratives of disadvantage. They are actual narratives that have been approved by the SBA. The names have been changed to protect the identity of the individuals but will give you a good idea of the level of specificity that must be provided with your narrative.