SBA 8a certification is a business development program for the small businesses.
A small business can get access to federal contracts by participating in this program.
So, this is a great opportunity for small businesses to grow.
However, not all small firms can get an access to the federal contracting opportunities.
A company in order to win government contracts first needs to become 8a certified and for becoming certified the firm needs to meet certain requirements.
Among the many requirements, one is the economic disadvantage requirement.
A firm needs to have the economic disadvantaged qualifications for obtaining the 8a certification.
Here in this article we are going to discuss about these qualification in detail.
Personal net worth not to exceed $250,000 The entrepreneur of the firm should not have more than $250,000 as his/her personal net worth in order to qualify for the 8a program.
The SBA takes into account the following things while considering the personal net worth amount: • All your checking accounts • All your savings accounts • All your stocks, cash and bonds • All your RVs, automobiles and motorcycles • Any other assets Although there are few things like the value of your firm, residence, IRAS and 401Ks, which needs to be declared on the SBA Form 413, they are not considered by the United States Small Business Administration as a part of the personal net worth limit.
The SBA doesn't even include the value of your retirement accounts in the net worth limit.
Annual salary not to exceed $250,000 The applicant should be the highest paid person in the company but his/her salary should be reasonable in proportion to the annual gross revenue of the firm.
To be qualified as an economically disadvantaged individual, his/her annual salary should not exceed $250,000.
Total market value of assets not to exceed $4,000,000 The SBA is going to consider all your assets present market value and see to it that the amount doesn't exceed $4,000,000.
It won't take into account your liabilities.
The representatives of the Small Business Administration will be looking for any unusual or large transfers of money between accounts during 3 years period preceding the 8a application submission.
It will even see two more things: whether you have presented huge amounts of money to your relatives whether your house is in mortgage Average two year Annual Gross Income not to exceed $200,000 The individual who is applying for the 8a certification should consider his/her average two years Annual Gross Income.
The applicant cannot have an AGI of more than $200,000 averaged over the last two tax years.
Narrative statement of economic disadvantage The applicant should be able to produce a narrative statement of economic disadvantage for obtaining 8a certification.
An applicant needs to have all the above-mentioned qualifications in order to prove the SBA that he/she or the small business is economically disadvantaged.