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New SBA 8(a) Certification Rules

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By Stephanie Rabiner, Esq. on February 16, 2011 8:50 AM

The first overhaul of the Small Business Administration 8(a) Business Development Program has been completed, with revisions to the SBA 8(a) program taking effect on March 14, 2011.

The program, designed to improve the success rate amongst minority and other disadvantaged businesses, has changed for the better. New regulations are designed to combat waste, abuse and fraud, as well as clarify portions of the SBA certification process.

To recap, to participate in the SBA 8(a) program, a business must be owned and controlled by at least one U.S. citizen (of good standing) that belongs to a socially and economically disadvantaged group. This can include race, ethnicity, disability, and gender, amongst other classifications. The business must also be small and demonstrate a potential for success.

The SBA 8(a) revisions focus on two key areas: SBA certification requirements and oversight.

Ownership and control requirements will now be more flexible. The SBA has more discretion as to whether to admit companies owned by individuals with immediate family who are owners of current or former SBA 8(a) participants. The revisions also clarify what assets are considered when determining whether a business is economically disadvantaged. The SBA certification team will consider total assets, gross income, retirement accounts and the owner's spouse.

On the oversight front, mentors who take part in the Mentor-Protégé Program will face consequences, including debarment, for failing to provide assistance. Tribally-owned firms will also be required to report how the program benefits their community.

Overall, the revisions to the SBA certification process and accompanying regulations should make the program more beneficial to disadvantaged small business owners.

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