The U.S. Small Business Administration (SBA) implemented the 8(a) Business Development Program to benefit small business owners who are either socially or economically disadvantaged by limiting competitive bidding for certain projects to only businesses that participate in the program.
Legal Qualifications
First and foremost, your business must qualify as a small business under the North American Industry Classification System (NAICS) code and must be owned (51 percent or greater) by at least one socially and economically disadvantaged person who is of good character and shows the potential for success in the company. You must prove your disadvantaged status by a preponderance of the evidence. For this reason, it is crucial to speak to a qualified attorney who can assist in proving the requisite legal qualifications.
As a small business owner, you must also meet the following requirements:
- No previous participation in the program
- A personal net worth of no more than $250,000
- An adjusted gross income of no more than $250,000 in the previous three years
- No more than $4 million in assets
- A role as one of the sole decision makers in the daily operations of the business
Corporate Governance Documents
Even if you and your small business qualify as participants in the 8(a) Program, you must gather several documents before you submit your application through the online portal. Such documentation might include a 1010 form, if applicable; stock, purchase or sales agreements, if the small business changed ownership or legal structure in the past two years; shareholder agreements; and buy or sell agreements, if applicable. Other documentation you must provide includes formation documents that identify:
- Company name and address
- NAICS code
- Ownership structure
- Names of owner(s), director(s), and officer(s), along with ownership percentages
- Federal tax returns for the preceding three years
Mentor-Protégé Relationship
The SBA 8(a) Mentor-Protégé Program pairs small business owners with larger, more financially successful entities. The benefits of this program include enhancements to the small business during mentoring, help from the mentor in building and expanding upon the small business and improving the protégé’s ability to bid successfully on contracts.
Joint Venture and Teaming Agreements
Small businesses that have already entered into a mentor-protégé contract can subsequently establish a joint venture; the companies can then work together when bidding on contracts. In order to become eligible, the small business must first prove that it lacks the capacity to enter into contracts on its own. The mentor entity can enter into a joint venture with its protégé to bring additional resources, funding, and expertise to the protégé. Although this could significantly benefit a small business, there are additional criteria and forms to submit before entering into a joint venture.
Speaking to an attorney qualified in this area can reduce the confusion you might experience when trying to identify whether a joint venture can truly benefit your small business.
Contact Us
If you need assistance with an issue relating to the 8(a) Program, or if you want to learn more about your rights and responsibilities, call the attorneys at Robbins Law Group, PLLC, to learn more today.
