Posted by Biz Central USA Marketing Team on February 8, 2010 under Small Biz and Entrepreneurship,Small Biz Certifications | Be the First to Comment

If you are a small business owner and are considering applying for the SBA 8(a) program, here are some key eligibility requirements and pointers to help you before you invest time into the application process.

First and foremost the SBA 8(a) program only certifies firms that are currently in business. In order to apply you must be the majority owner and also involved full-time in the day-to-day management of the business to meet eligibility requirements. If you meet these requirements the next key point to consider when applying is the two year business operation requirement. The 8(a)certification program requires applicants to be in business for at least two years before their application will be considered for approval. Exceptions to this rule are sometimes granted but are not guaranteed. If you have been in business for less than two years and have successfully generated profits (this does not mean you have to been making huge profits), and have a successful track record with contract completion a waiver can be requested.

Only applicants who are members of socially disadvantaged groups and are economically disadvantaged can be considered for approval to the program. Many 8(a) applicants become ineligible for 8(a) certification due to the $250,000 net worth limit. This limit is defined as a personal net worth of $250,000 or less, excluding the equity in a personal residence or business. It is crucial not to make attempts at hiding assets from the SBA. The SBA has an extensive amount of tools and knowledge base regarding determining the size of a business and looking at two years tax returns to know what an individual’s net worth may be.

It is crucial for the SBA that as a small business owner you have enough working capital and business contracts that they deem your business eligible to have a high likelihood of success. Some planning can be done to mitigate this problem if the individual’s net worth is close to $250,000, such as selling securities and investing the money in the primary residence. Unfortunately for individuals with extremely high net worth’s it is difficult or unlikely to work around this clause in the SBA application.

Finally only applicants who are US citizens are eligible to apply for the 8(a) certification. Each year the federal government sets aside millions of contract dollars for certified small businesses to bid and receive contracts relating to the many federal agencies that exist. Many federal contracts are “set aside” for 8(a) firms, meaning that only certified businesses may apply or be considered. The designation of SBA 8(a) is a highly regarded program, if you meet these requirements you should consider pursuing this designation for your small business.

Posted by Biz Central USA Marketing Team on March 26, 2009 under Small Biz News | Read the First Comment

Yesterday, USA Today published a story regarding unqualified companies abusing the HUBZone Program (Historically Underutilized Business Zone).  This is definitely something you might want to read if you are a small business owner, an entrepreneurial ′newbie′ or anything in between.  In a short re-cap:

• The Government Accountability Office found that 19 companies were improperly awarded nearly $30 million in federal contracts.
• The GAO reported that ″there are likely hundreds and possibly thousands of firms″ in the program that don′t meet its requirements.
• The committee′s chairwoman, Rep. Nydia Velázquez, D-N.Y., said she plans to urge the SBA to shut down the program until it can fix the problems.
• In July, the GAO reported that they found that 10 Washington D.C. area businesses were improperly part of the program. One company, for example, listed its office as a small room above a dentist′s office in a low-income area, while investigators found its main office was in the suburb of McLean, Va.
• It was determined that 7 of the 10 companies invested in the July report were ineligible.
• SBA officials told the GAO they are ″reengineering″ the program to make it more efficient and to do a better job of preventing and detecting fraud and abuse.

For qualified small businesses the HUBZone program can be an excellent opportunity to secure government contracts, help to empower communities, create jobs, and attract private investment.  What happens though, when small businesses are taking advantage of this program?

 As a small business owner, how do you feel about the millions of dollars given to these unqualified companies? What steps do you think the SBA can make in improving the HUBZone program and preventing such abuse?

Map of U.S. HUBZones

Read the full GAO report.