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Your SBA 8(a) Application and the Possible Government Shutdown

The next few days will be interesting for government contractors and 8(a) applicants alike as we wait to see what October 1, 2013 will bring: a normal business day, or a full federal government shutdown.

If the shutdown does indeed occur, any days the federal government is closed will be days lost in regards to your 8(a) application, so if you are meticulously counting down the days to see if the SBA really will give you a decision on your 8(a) application within the 90 day processing time frame, you’ll be waiting on that SBA decision letter a little bit longer.

In the mean time, please do continue to meet any deadlines the SBA might have given you, and be sure to track your packages and use signature confirmation–you might need your delivery records later on to prove you actually met your deadline even though the government’s doors were technically closed that day.

Try not to panic and proceed normally when it comes to your 8(a) application; to date the SBA has not issued any public statements about the 8(a) review system and how it will be impacted by a potential shutdown, so unless the SBA issues advice to the contrary, just move forward as if everything is the same. 

 

Insurance and the SBA 8(a) Application

There are multiple obvious reasons why your small business should invest in general liability insurance–continuity of operations in case of a disaster, for example–but another good reason to purchase a basic business insurance policy is to demonstrate stability and trustworthiness to the federal government when you apply for SBA 8(a) certification.

The Small Business Administration will ask you to provide it with a Certificate of Insurance or insurance policy declaration pages as a part of the baseline 8(a) application.

If you are a home-based business, the SBA will ask you for a copy of your homeowner’s insurance policy or renter’s insurance policy in lieu of a business insurance policy if you do not have one.

There are multiple different types of business insurance available such as general liability policies, key employee coverage (in case of death or disability of a principal of the business), business automobile and vehicle insurance, etc., so you might want to seek the help of a broker or insurance professional who can tell you about the different options and perhaps bundle some of them together for a customizable, affordable rate.

To locate a reputable professional who is knowledgeable about insurance for small businesses (not for consumers), the following trade association website is a good starting point:

National Association of Insurance Commissioners (NAIC) “Insure U for Business” Website

http://www.insureuonline.org/smallbusiness/

What is a Bank Signature Card?

In days of yore, whenever a company opened a new bank account, the company would be issued a card by the bank listing the names of the authorized signatories for the account.

The SBA still uses this outdated term to refer to a document from a bank that displays the signatures of the individuals at the company who have access to the account. Perhaps a more updated term would be “bank account signature sheet.”

The SBA cares about which specific individuals have access to each company bank account because financial responsibility for the firm correlates closely with potential control over the company.

Please note that any person you provide with access to your company’s financial accounts instantly gets drawn into your 8(a) application process whether they are a company owner or not, meaning he or she will be forced to provide the SBA with 3 years of personal taxes and W-2 forms, a resume, a fingerprint card (if ever arrested or charged with anything), and a variety of other SBA forms and documents.

For this reason, select the individuals you trust with financial responsibility and bank account access at your company extremely carefully. If you choose the wrong person–someone with a felony conviction perhaps, or someone who caused the federal government to lose a tremendous amount of money by not paying their personal income taxes–the presence of that person on your company’s bank signature sheet can harm or ruin your chances at 8(a) certification.

For more information about the 8(a) application process, please refer to our new site www.8aapplication.com.

8 a Requirements at a High Level: A Fast Primer

What kind of company qualifies for the SBA 8(a) program, in a general sense? Here is a quick and fast primer to help you determine whether or not the 8(a) program might be a good fit for you and your company this year:

The SBA 8(a) eligibility requirements–at a very high and general level–include all of the following elements:

Small Business Size: Your company must be small as defined by the Small Business Administration, not by other federal agencies or by private organizations.

Disadvantaged Business: The company must be both owned and controlled by one or more people who are disadvantaged, and the highest person in your company hierarchy (the person with the highest ranked title and role at the company) must be disadvantaged.

Do not forget the control part–this means a disadvantaged person must be in charge at the company.

Mere 51% (or more) ownership is not enough–a disadvantaged person needs to be actively running the company full time.

Survivable: The company must be stable enough to remain open and operational for 9 or more years, the duration of the 8(a) program.

This means that despite the obstacles and challenges posed by disadvantage, the company needs to be relatively solid and able to withstand peaks and valleys in revenue. The SBA calls this “potential for success.”

Proven Track Record: Although the company does not need to be involved in federal contracting yet, the company must have a proven track record of experience and completed jobs or contracts so the SBA has some past performance history to evaluate.

Testimonials from satisfied clients on letterhead will be required to get into the 8(a) program.

Good Moral Character: All company representatives must be morally upstanding individuals–and that includes being fiscally responsible. Felons and individuals on parole cannot be in any management or ownership positions. Tax scofflaws are prohibited.

A house going into short sale, a DUI arrest 10 years ago, and similar minor blemishes are not an issue; but felony convictions, unpaid taxes, liens and judgments, unpaid student loans, and defaults on SBA loans are all problems that can ruin your 8(a) eligibility.

Government Certification Specialists Inc. has even more detailed 8(a) qualification guidance available for you on our new website www.8aapplication.com — check it out today, as a number of resources on the new site are free of charge, and other templates, examples, and kits on the site are as inexpensive as $5.95.

8a Application Timeline: How long does it take to get 8a Certified?

How long does it take to get SBA 8(a) certified?

The real answer:

The time it takes to get your 8(a) application reviewed and approved by the SBA varies, and the only people in control of how long it takes are the staff members of the United States Small Business Administration (SBA), a federal government agency.

The SBA claims the entire application process will take 105 days or less—the “regulatory timeframe.”

The problem? The regulatory timeframe is not enforceable and is routinely exceeded because the SBA has a limited staff tasked with processing dozens upon dozens of 8(a) applications every week, and with the bad national economy, more people want 8(a) certification than ever before.

The best thing to do is plan on the 8(a) process taking multiple weeks and several months.

Don’t make promises to your clients and teaming partners about when you will have that 8(a) certification letter in your hand because the timeframe can vary wildly depending upon factors like:

  • The number of owners, officers, and directors—the more key personnel in your company, the more paperwork inside your 8(a) application, which equals more processing time.
  • Fingerprint cards—If you have a fingerprint card in the application, add on 6 to 10 more weeks.
  • Complications and anomalies—The more complicated your company is, the more paperwork will be inside your 8(a) application, which means the SBA staff has more documentation to review.

Let’s examine the various phases of the 8(a) application timeline using a best case scenario:

SBA 8(a) certification often takes multiple months to obtain.

SBA 8(a) Application: Typical Timeline and Chronology of Milestones

What is the best way to compress the SBA 8(a) application timeline?

  1. Organize your 8(a) application documents carefully using the same sequence as in the SBA 8(a) checklist.
  2. Label your documents properly especially if they are not easily identifiable at a glance.
  3. Explain all anomalies and complications to the SBA thoroughly.
  4. Eliminate anomalies and complications prior to submitting the 8(a) application for review.
  5. Include a signed, dated letter of need from a federal buyer (on government letterhead) in your 8(a) application to demonstrate to the SBA that the federal government has an immediate and pressing need for the goods or services you offer.

Brought to you by Government Certification Specialists Inc.

www.8aapplication.com and www.get8acertified.com

Plus the longest running SBA 8(a) blog on the Internet today–bringing you trustworthy SBA 8(a) advice monthly since 2008.

8a Application Dot Com Launches – Resources for Do It Yourself (DIY) 8a Applications

Government Certification Specialists Inc. has launched a new website for small business owners who want to independently complete their own SBA 8(a) applications without the aid of consultants:

http://www.8aapplication.com

This new site offers both free and low cost kits, examples, guides, tip sheets, forms, templates and samples of documents required for 8(a) certification.

Although most documents are free of charge, items available for purchase range in cost from $5.95 up to $59.95.

Our goal is to add new and affordable documents to the site continuously to enable small business owners to successfully navigate the confusing and time consuming SBA 8(a) application process on their own.

For questions about 8AAPPLICATION.COM or for other 8(a) advice or guidance, please drop us a line at info@get8acertified.com or call us at 703-350-8381.

Good luck to you and your small business!

Where Do I Find These 8(a) Documents?

Your SBA 8(a) application is likely to contain multiple dozen documents by the time it is finished. Here is a quick guide on how to locate some of the common items you need but might not have on hand:

1. Copies of Articles of Incorporation / Articles of Organization are typically filed with and stored with your Secretary of State’s office for the state in which you first formed your business. You can usually order copies from the Secretary of State’s office for a nominal fee, but bear in mind some states still force you to do this through “snail” mail, so allot enough time to obtain yours through postal mail.

2. Certificates of Good Standing are sometimes called Certificates of Existence (or other similar names) and are typically purchased for a nominal fee from your Secretary of State’s office. Again, some states make you obtain your certificate through snail mail so allot several weeks for this.

3. DBA or Fictitious Trade Name Certificates are often filed with your county court system so you can typically get copies from the Clerk of the Court’s office.

4. If you lost your W-2 forms, contact your employer’s human resources department to obtain archival copies.

5. If you lost your tax returns, you could be in a pickle–the IRS prefers to provide tax transcripts only which lack some of the details the SBA wants, so the SBA sometimes rejects the transcripts. If you used software to generate your taxes you can print a fresh copy, and if you used an accountant you can contact his or her administrative staff to request a duplicate copy. Otherwise contact the IRS to determine what data they have on file for you.

6. If you used an incorporation service to start up your company, check the binder the service provided you for your bylaws (corporations) or operating agreement (LLCs). The binder might also contain blank stock or membership certificates and/or templates for original meeting minutes.

7. If you are lacking stock or membership certificates, or require more certificates, you can buy blank ones printed on nice paper at office supply stores.

8. The SBA will no longer accept any FD 258 fingerprint cards that you might procure yourself online or from the FBI. Get an official SBA-stamped FD 258 fingerprint card from your local SBA office instead: http://www.sba.gov/about-offices-list/2

9. To obtain proof that you paid your tax obligations in full, go to your bank to obtain either cancelled check copies (both sides) or archival bank statements. Your bank might charge you a nominal fee for the labor involved in locating and duplicating the records you need especially if you have to go backwards in time a few years.

10. To prove your technical capabilities to the SBA, contact the records department at each educational facility, university, or trade school you attended to obtain transcripts to prove your completed coursework and/or certifications. There might be a small fee for documents processing.

By the way, many SBA 8(a) forms can be found on the SBA website at: http://www.sba.gov/about-sba-services/7482

For more information you can speak to our specialists via info@get8acertified.com.

 

Are There Costs Associated With 8(a) Certification? A Few Things to Consider As You Apply

Applying for Small Business Administration 8(a) certification itself is free of charge–the federal government does not charge you anything to file for 8(a).

As you prepare your application materials, however, bear in mind these small costs so you are not caught by surprise along the way:

1. Postage. You are definitely going to want to send your 8(a) materials to the government in a secure and traceable fashion such as FedEx, UPS or DHL. (We are sad to say this, but the United States Postal Service has lost some of our clients’ packages in the past.) After your initial application submission there will likely be some back and forth with the SBA that will require the mailing of additional files and documents.

2. Notary public. You have to notarize at least one document in your 8(a) application and you might discover other documents that require notarization as well, depending upon your individual situation.

3. Accountant. If you do not compute your company financials yourself you will need to pay your accountant to generate a current balance sheet and profit and loss statement at a very minimum.

4. Ordering company formation documents. If you misplaced your company formation documents or if they are incomplete, your state of formation will charge you a fee to send you new copies.

5. Photocopying and printing. You don’t want to send the SBA your original documents–send copies only, as originals will not be returned to you. Also, your copying costs might add up if you go to a copy shop; one of the most recent 8(a) applications we processed was ten inches tall!

Can a Wholesaler Get 8(a) Certified?

Yes, a wholesaler can get 8(a) certified.

In contrast, a broker cannot get SBA 8(a) certification.

Wholesalers will typically need to provide the SBA with evidence that they have a warehouse or a storage facility to prove that they are not brokers.

More 8(a) information is available from us from info@get8acertified.com

Have a good summer weekend!

 

SBA 8a Eligibility Requirements in Simple Language

Small Business Administration 8(a) Business Development eligibility requirements can be confusing and perplexing. In an attempt to minimize this confusion and help small business owners determine if 8(a) certification is right for them, Government Certification Specialists Inc. (GCS) presents fifteen SBA 8(a) eligibility requirements translated into simple language. 

Please note that SBA 8(a) program eligibility requirements change sometimes in response to federal court cases, so always be sure to look up the most recent rules and regulations when you apply for 8(a) certification: http://www.access.gpo.gov/nara/cfr/waisidx_06/13cfr124_06.html 

Here are fifteen core eligibility requirements for 8(a) applicants: 

1. Social disadvantage: You must be Hispanic American, Asian American, Black American, or Native American OR a person who has experienced persistent and chronic discrimination against you on the basis of disability, gender, veteran status, race, culture, or some other factor. If you are from one of these “non-presumed” groups, then you will have to provide the SBA proof of the discrimination you have faced in American society, education, career, and business. 

2. Personal net worth must be under $250K: This personal net worth figure takes into account all of your cash, checking and savings accounts, real estate (except your personal residence), IRAs, 401Ks, stocks, bonds, automobiles, motorcycles, RVs, and other assets. The value of your company is declared on the personal financial statement (SBA Form 413); however, it is not counted towards the personal net worth cap.

 3. Annual Salary: The 8(a) applicant must be the highest paid person in the company. His or her annual salary must be reasonable for the industry and reasonable in proportion to the company’s annual gross revenue. (In other words, if your company earned only $100K in revenue in 2010 and you took $95K of that money for your salary, you are making what the SBA calls “excessive withdrawals” from your company, a potential 8[a] application negative.)

 4. Total Current Market Value of All Assets: The current market value / face value of all of the 8(a) applicant’s assets—ignoring the liabilities completely—must be under $4 million. 

5. Average 2-year Adjusted Gross Income (AGI): The applicant’s two-year average adjusted gross income (AGI) must be under $200K. 

6. Citizenship: The applicant must prove his or her American citizenship with a birth certificate, passport, or other documentation. 

7. Business size: The company must be a small business according to current SBA size standards, which are expressed in terms of either gross revenue (dollars) or staff levels (number of employees). Size standards are set by the SBA according to North American Industrial Classification System (NAICS) codes. Determine your company’s primary NAICS code based upon the most recent 12 months of business activity and then look up the corresponding size cap here: http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf 

8. Control: A socially and economically disadvantaged person must have full, unfettered control of the company including both strategic decision-making and day-to-day operations. This person must hold the highest, most powerful title in the company also—no exceptions

9. Ownership: 51% or more of the company must be owned by one or more socially and economically disadvantaged individuals. Also, quoting the SBA directly, “A business can also qualify for the 8(a) BD program if the firm is owned by an Indian tribe, an Alaska Native Corporation (ANC), a Native-Hawaiian Organization (NHO), or a Community Development Corporation (CDC).” 

10. Contract Performance: The applicant company must have a substantial contract performance history including one contract completed within the most recent 12 months and a balanced portfolio of clients/projects. Over-reliance on any one client (meaning 70 percent or more of gross revenue stemming from just one client) is viewed by the SBA as a significant problem. 

11. Age of the Company: Chronological age of the company is not as important as having two recent consecutive federal tax returns proving your company has earned revenue. No tax return? Apply to the 8(a) program later after you have at least one tax return to show SBA (and meet all of the other early admission requirements). No revenue on your company tax returns? Unfortunately your company will not be considered to be economically viable by the SBA at this time. Your company requires a certain level of stability or “potential for success” to gain admittance into the 8(a) program, and this means proof of revenue is required. 

12. Full time devotion to the applicant firm: The 8(a) applicant must dedicate himself or herself full time to managing the 8(a) firm (during normal operating hours for the industry) without any outside employment or interference (e.g., full time student status.) Your attention needs to be devoted 40+ hours per week towards ensuring the success of the applicant company within the 8(a) program. Do you own multiple businesses? If yes, the SBA will make you prove that these other companies don’t interfere with your full time management of the applicant firm.

13. Good moral character: Applicants with felony convictions and applicants on parole are not allowed to receive the federal benefit of 8(a) certification. Divulge all past arrests and detainments by police to the SBA, which will in turn validate the information with the FBI. Good moral character is an essential 8(a) program eligibility requirement.

 14. No unpaid federal obligations: The applicant firm—and all of its owners, officers, directors, managers, bank signatories, and key employees—must pay all federal obligations including taxes, student loans, etc. before receiving 8(a) certification. 

15. Company financial stability: To the SBA, “disadvantaged” does not mean “destitute.” Your company needs to have approximately 3 months’ worth working capital in its accounts or else it needs to have ample credit and loan resources to help it survive. If your company is struggling to keep open, then most likely you are not a good candidate for the 8(a) program until your company stabilizes. The federal government will only admit a company into the 8(a) program if it believes the company has enough stability, viability, and “potential for success” to last all 9 years in the program. The SBA also expects your company to have enough resources and finances to perform large federal contracts and expand in response to increasing federal contracting workloads. 

These 15 core SBA 8(a) eligibility requirements are not publicized frequently by the SBA yet are all important factors the SBA will evaluate to determine if your company is worthy of inclusion in the 8(a) Business Development program. If you do not meet all 15 eligibility requirements at this time, you might need six to twelve months to make changes to your company to bring it into compliance with 8(a) rules and regulations. 

If you need help with your 8(a) application, you have multiple options available: 

1. Work with your local SBA office. Find your local branch of the SBA here: http://www.sba.gov/content/find-local-sba-office

2. Seek free help from your closest SCORE (formerly called the Service Corps of Retired Executives) office: http://www.score.org

3. Contract with a consulting firm like Government Certification Specialists Inc.: www.get8acertified.com 

A.L. Van Mantgem is an account executive at Government Certification Specialists Inc. of Leesburg, Virginia, a veteran-owned company that assists minority owned firms with the 8(a) certification process and with maximizing the benefits of the SBA 8(a) program. Prior to joining Government Certification Specialists Inc. in 2008, Ms. Van Mantgem served as a defense contractor and business development analyst at two different 8(a) companies for a decade and was directly responsible for authoring a successful Congressional appropriations request that resulted in a $1.8 million research and development contract for an 8(a) company. She can be reached via http://www.get8acertified.com.

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