The Ins and Outs of Disadvantaged

Posted by Biz Central USA Marketing Team on November 11, 2009 under Small Biz and Entrepreneurship | Be the First to Comment

During the business certification process, small business owners will undoubtedly come across the terms “economically disadvantaged” and “socially disadvantaged”. But what do these terms actually mean? This all depends on the agency responsible for granting the certification your small business wishes to obtain. Some small business certification programs allow for business owners to have a higher net worth than others, and some  limit their programs to members of certain racial or ethnic groups. These differences can be significant from program to program, and it is recommended that you work with a competent professional in order to guide you through the business certification process, including which certifications your small business may qualify for. In order to keep things simple, we will focus on defining social and economic disadvantage for the Small Business Administration’s 8(a) Business Development program, or the SBA 8(a).

The Small Business Administration’s 8(a) Business Development program was created in order to provide contracting opportunities to minority-owned and other disadvantaged businesses. The SBA considers two factors when certifying a business as disadvantaged -whether or not the qualifying owner has been subject to prejudice resulting in a negative impact on their advancement in the business world, and the net worth of the qualifying owner. To keep matters simple, a socially disadvantaged individual whose net worth is less than $250,000 will be considered economically disadvantaged, but what exactly does “socially” disadvantaged mean? The SBA automatically presumes the following individuals to be socially disadvantaged:

• Black Americans
• Hispanic Americans
• Native Americans
• Asian-Pacific Americans
• Subcontinent Asian-Americans

But what about persons who have experienced social disadvantaged as a result of other factors, such as service-disabled veterans or other Americans with disabilities? These individuals are not presumed to be socially disadvantaged, and as a result, must provide a preponderance of the evidence detailing their personal experiences of substantial and chronic disadvantage in American society. This evidence must be presented in the form of a narrative that is to be included with the 8(a) business certification application. It is important to note that no one can guarantee whether or not a person who is not a member of an above-designated group will be granted disadvantaged status by the SBA, and subsequently, have their business certified under the 8(a) program. However, the SBA does provide general guidelines for factors that are considered when determining whether or not a person is socially disadvantaged, such as access to education, employment, and business credit or capital.

If you are unsure as to whether or not your business meets the criteria for 8(a) certification, work with a competent professional who will be able to determine if you possibly qualify for business certification under this program, and who will also assist you in drafting an effective statement of economic and social disadvantage. By doing so you will greatly increase your business’ chances of being certified under the 8(a) program, and ultimately, being awarded lucrative government contracts under this program.