The Small Business Administration’s 8(a) program, designed to support socially and economically disadvantaged small businesses, has recently undergone changes due to legal challenges. While it wasn’t directly targeted by a U.S. Supreme Court decision affecting college admission programs, it has been impacted, and more adjustments may be on the horizon as litigation continues.
At the core of the issue is how social disadvantage is determined for program eligibility. Previously, individuals from specific racial groups could establish their social disadvantage. However, a court ruling highlighted the need for a more narrowly tailored approach. To comply, the SBA now requires individuals to describe their social disadvantage rather than relying on race-based assumptions.
Here’s what small business owners need to know:
Basic Qualification Factors For 8(a) Program
Individuals from specific racial backgrounds could establish their social disadvantage to qualify for the 8(a) program. They must also meet other ownership and economic qualifications outlined by the SBA. To comply with the ruling, the SBA now requires applicants to describe their social disadvantage in detail. This can be done through a questionnaire provided by the SBA or by preparing a “social disadvantage narrative.” The goal is to provide evidence of social disadvantage beyond relying solely on racial identity.
Simplified Questionnaire: The SBA encourages the use of the questionnaire, which simplifies the process. However, if applicants have already prepared a narrative, they can upload it directly.
Net Worth, Income, and Asset Tests: Economic disadvantage must still be demonstrated through personal net worth, adjusted gross income, and assets. Annual reviews are also required for ongoing eligibility.
New Application Approval Timelines: The application process, which usually takes 60 to 90 days, might take slightly longer with the new requirements. Those already in the program needing to submit new evidence may have a quicker process.
Ongoing Litigation: The plaintiff, Ultima Services Corporation, seeks broader action, but the outcome is pending. Despite this, small businesses are encouraged to apply or update their application, as opportunities should not be missed.
MySetAside stands with small businesses navigating these changes in the 8(a) program, providing support and guidance. As changes evolve, we remain dedicated to helping small businesses access federal contracting opportunities. Don’t wait, Register today, and secure your place in this program, even as the legal landscape shifts.