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.

Where to find information on 8(a), HUBZone and Women-Owned Small Business Contracts

The most comprehensive source for information on awarded 8(a), HUBZone and Women-Owned Small Business Contracts is the Federal Procurement Data System (FPDS).

The FPDS contains historical information on contracts whose estimated value is $3,000 or more.

To gain access to this system you must register. Registration is free.

The FPDS allows you to drill down deep within the data inputted into the system and can provide you valuable information to help in your Federal Marketing efforts.

For example, you can perform the following searches within the system.

1. How much did a specific federal agency spend in the most recently government fiscal year or past years using 8(a), HUBZone or Women-Owned Small Business as the set-aside method.
2. How many 8(a) actions or contracts were awarded within a specific agency. You can also drill down to a specific department, office or region within the agency.
3. Detailed information on the awarded contract such as:

  • The solicitation number
  • Date signed or completed
  • Type of contract
  • NAICS code
  • Product or Service Description
  • Place of Performance (City, State or Zip Code)
  • Competition Information (8(a), HUBZone, Women-Owned, etc.)
  • Name of Contractor

These are just a few of the parameters that you can search on within the FPDS. All of this information can give you a leg up on your competition by allowing you to narrow your marketing efforts to ferderal clients who have purchased your products and services.

Download a report (PDF) that shows the amount spent and the number of contracts awarded with each federal agency in FY 2011.

Here is a summary:
8(a):
Number of Contracts: 117,343
Total Dollars Spent: $16,633,899,024.15

Women-Owned:
Number of Contracts: 318,937
Total Dollars Spent: $16,839,376,300.17

HUBZone:
Number of Contracts: 91,717
Total Dollars Spent: $10,001,960,445.11

For more information on 8(a) Certification, HUBzone Certification or Women-Owned Small Business Certification please call us at 813-333-5800 or visit www.cloveer.com.

 

What you won’t hear from Cloveer. Anyone can get 8(a) certified.

The truth is that NOT everyone can get 8(a) Certified.

As the President of Cloveer, Inc. I talk to a lot of people who are interested in becoming 8(a) Certified. I would estimate that 7 out of every 10 people I talk to do not and cannot qualify for the 8(a) Program due to the strict 8(a) Program requirements.

Some these problems range from the applicant having an adjusted net worth that exceeds the SBA regulatory limit that cannot be lowered without violating the SBA transfer requirements to not being able to come up the required level of information and evidence required to prove social disadvantage to having an affiliation that may cause the SBA to find an unconditional control issue.

At Cloveer, we conduct a detailed pre-qualification interview with all of our clients before we charge any fees or start preparing their 8(a) Application. This is done so neither of us waste any time or money. We ask our clients the “Killer” questions that will let us and more importantly them know if they have an eligibility issue, unknown to them. The fact is that there are ways around a lot of the eligibility issues but making changes may impact them beyond their comfort zone.  We advise our clients on the pros and cons to any potential eligibility issue and tell them when there is one that has no workarounds. Our feeling is that is it better for them to know now rather than later.

As you can see from our blog and website, www.cloveer.com, we provide more information about the 8(a) Program that all of our competitors. We want you to know as much information about the SBA 8(a) Program as possible since you will be the one participating and using it as one of the tools to becoming a success. The more you know the better decisions you can make before you apply and while you are in the 8(a) Program.

For more information on the 8(a) Program, please visit us at www.cloveer.com or call us at 813-333-5800.

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.

How difficult is it to get SBA 8a Certified? Should I do it myself or use a consultant?

You may have heard that the SBA rejects approximately 70% and questions almost 90% of all 8(a) Applications submitted. In my professional opinion, as the President/CEO of Cloveer, Inc., who has assisted in over 2,000 successful 8a applications, it can be very difficult without some kind of professional assistance. As a small business owner who wants to apply, SBA 8(a) Certification expertise will most likely be out of your skill set. You should consider hiring a consultant or attorney for some or all of the application completion process. Many small business owners who apply for the 8(a) Program on their own, actually do more harm than good by not knowing the 8(a) Program rules and regulations and therefore cause themselves to be ineligible.

The fact is that not everyone can get 8(a) Certified.  As of August 2017, there are only 6,849 active SBA 8a Program participants. Submitting an 8(a) Application that had major problems that have been “fixed to meet SBA 8a Regulations ” may possibly end up costing your business concern the ability to ever get 8(a) certified. Once you submit an 8(a) Application and it is either returned with a letter or outright rejected, you have essentially made the process of getting 8(a) Certified 100 times more difficult. The bottom line is that it is very important to get your 8(a) Application done right the first time it is submitted.

Can any consultant guarantee that your 8(a) Application will be approved by the SBA?

The answer is NO. The Small Business Administration (SBA) makes final determination on all 8(a) Applications and therefore no one other than the SBA can guarantee that your 8(a) Application will be approved. If any consultant guarantees that they can get your business concern 8(a) Certified, they are (1) Violating the SBA regulations, since the SBA regulations strictly prohibit any type of guarantee and (2) Flat out lying to you and will most likely just take your money, waste your time and cause you problems with your 8(a) Application. I have seen some desperate consultants that provide a money back guarantee and if you don’t get approved for the 8(a) Program, they will give you your money back. I couldn’t tell you how many times I get calls from people who have been burned on a money back guarantee. I hear the consultant always finds a way to say the client violated the contract so they don’t have to give the money back. I believe in the old adage “If it looks too good to be true, it probably is”. When you consider hiring an consultant you should speak to the actual individual who will be preparing your 8(a) Application, not just the sales person. If you hire a consultant to assist in the completion of your 8(a) Application, make sure you have a written agreement and nothing is left to a verbal  agreement.

Here is an excerpt taken from the SBA.gov website:

Please be advised that no one can guarantee that an application for 8(a) program participation will be approved. The application process is intended to assure that each applicant receives a fair review. Any irregularities in the application review process should be immediately referred to the SBA Office of Inspector General.”

My advice is to follow your gut feeling. I have more tips below to assist you in considering which consultant to hire for assistance with your SBA 8(a) Application.

If I follow the SBA’s  instructions for getting 8(a) Certified, can I get successfully 8(a) Certified on my own?

Possibly, but it will most likely take you more than a year, multiple submissions, and leave you completely frustrated.  The SBA 8(a) application instructions provide a checklist of documents to submit with your 8a Application, but provide no advice whatsoever on the specific requirements of these documents. Additionally, the SBA’s checklist is not a catch-all list. There are other items that will be requested and any good consultant will know what these missing items are.

What should I look for if I decide to hire a consultant to assist in the completion of my SBA 8a Application?

Some people immediately look at price as a defining factor in choosing a consultant. While price should certainly be part of your selection strategy for a consultant, you should also consider the following:

1. Can you determine who the company actually is? Does the company list their physical address on their website? Does their website list information about who their principals and any affiliates they may have?

2. Ask for references of their certified clients and actually place calls to these people. Ask their clients if they were charged more than the price originally quoted. Did the person who sold the service to them or pre-qualified them actually do the work or did they get passed to a junior analyst. Ask them how long it took to get the 8(a) application completed and the processes they used to collect and manage the data that you submitted. Finally, ask them how long it took to get 8(a) Certified.

3. When you initially call a consultant, did they answer all of your questions or just try to get you to sign up? If you have a potential problem that you think will prevent you or your business concern from getting 8(a) Certified, did they give you their honest and candid opinion, based upon the their experience,  if this problem is fixable or not?

4. Finally, is the consultant someone who you feel you can work with and who you can trust since you will be providing tax returns, Social Security Numbers, etc.  Does the agreement show that they protect your information?.

If you would like assistance with your 8(a) Application, Cloveer can help.  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.

5 common misconceptions about getting 8a Certified

1. It’s easy to get SBA 8a Certified.

There are less than 10,000 active 8a program participants currently. There has never been more than 10,000 active 8a Program Participants at any one time in the 8a program’s history. The SBA returns over 90% of all 8a applications submitted and rejects 70% of all applications.

2. All I need to do is fill out the SBA’s 8a electronic application.

The SBA’s 8a electronic application is a very small portion of the overall 8a application. Most 8a applications are several hundred pages in length once you include all of the supporting documents required to be submitted along with it. The SBA does not accept any of these supporting documents electronically and they only provide a list of the supporting documents and do not tell you what requirements each of these supporting documents must meet.

3. Once I get 8a certified, I am guaranteed a federal contract.

Getting 8a certified does not guarantee that you will receive an 8a contract. In fact, about 50% of all 8a program participants never receive one contract because they do not know how to market their business to the federal government. Getting 8a certified will certainly open opportunities at the federal level but you must still spend the time and effort in marketing your business to potential federal clients.

4. My ASBDC, PTAC  and local SBA office told me I qualified to become 8a Certified.

There are two processing offices (King of Prussia, PA and San Francisco, CA) that review all 8a applications submitted. Final determination is made within the Washington, DC office. There are roughly 11 reviewers within the two processing offices and they are the individuals who review your 8a Application paperwork. Anyone who tells you that you qualify for 8a certification before reviewing all of your application paperwork does not know what they are talking about.

5. I don’t need any assistance in putting my 8a Application together.

Unless you understand the SBA Program Regulations, you should not attempt to put your 8a Application together yourself. The SBA 8a Application has many tripwires and potential application “killers” that could cause your 8a application to be returned for incompleteness or even rejected. We suggest that you find some assistance to help in some or all areas of your 8a Application.

The real benefits of getting SBA 8a Certified

By becoming SBA 8a Certified, your business concern will benefit by:

1) Having exclusive access to sole source/non-competitive and competitive set-aside federal contracts.  Sole source/non-competitive contracts will be available to your business concern for federal contracts with a total value up to $4 million for services and up to $6.5 million for manufacturing.  Federal contracts for 8a Certified firms that have a total contract value of more than $4 million for services and more than $6.5 million for manufacturing must be competed but only against other 8a Certified firms.

2) Limiting your potential competition. The big guys (e.g. Lockheed Martin, Turner Construction, etc.) will not have access to these federal contracts. In addition, there are less than 10,000 certified 8a business concerns currently participating in the 8a Program in the entire U.S.

3) Making you attractive to a larger federal government prime contractor. Since a business concern that is not considered small by SBA does not have access set-aside 8a contracts, you will be more attractive for teaming, joint ventures or mentor/protégé relationships.

4) Making it easier for your Federal client to purchase your products or services. 8a set-aside contracts require much less paperwork, time and bureaucracy. 8a contracts cannot be protested, only the size of the 8a participant can be questioned.

5) Getting you the contract/work faster. 8a contracts take much less time to be awarded than most other procurement methods.

Now that you know the primary benefits of becoming 8a Certified, what are waiting for? The key to getting successfully 8a certified is to get it done right the first time. We at Cloveer have assisted more than 2,000 business concerns to get through the tough 8a application process.

Special Licenses Requirements within the SBA 8a Application

If any special licenses are required for the industry in which the business concern operates, such as a General Contractors license, Professional Engineers (PE) license, Plumbing license, etc. has a copy been provided?

Is the license current and in the name of the business concern with the Applicant for 8a Certification as the holder/qualifier?

If the license holder/qualifier is not the Applicant, is the license holder/qualifier an equity owner within the business concern? If so, the SBA will determine that this individual has the ability to impact the control of the business concern, therefore the business concerns 8a Application will most likely be denied.

If the license holder/qualifier is the Applicant, and the license holder/qualifier has NO equity with the business concern, the Applicant and business concern must be able to prove that they have ultimate managerial and supervisory control of this individual.

 

Can 8a Contracts be Protested?

The size status of the apparent successful offeror for competitive 8a procurement may be protested.

The size status of the participant for a sole source 8a procurement may not be protested by another 8a participant or any other business.

The eligibility of a 8a participant for a sole source or competitive 8a procurement cannot be challenged by another 8a participant or any other business.

An 8a participant cannot appeal the SBA’s determination not to award it a specific 8a contract because the concern lacks an element of responsibility or is ineligible for the contract other than to request a formal size determination where SBA cannot verify it to be small.

The NAICS code assigned to a sole source 8a procurement may not be challenged by another 8a participant or any other business. In connection with a competitive 8a procurement, any business concern who has been adversely affected by a NAICS code designation may appeal the designation to the SBA’s Office of Hearings and Appeals.

For more information on the SBA 8a Program, visit cloveer.com