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Why are broker Dealers Ineligible to participate in the 8(a) program?

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Why are broker dealers ineligible to participate in the 8(a) program?

If you are labeled as a broker, but do not feel that you are, this article will help you understand how to get approved for the 8(a) certification and other programs by taking some important precautionary steps.

SBA wants success to come to every 8(a) approved firm. Making sure they will be successful is why the approval process is stringent. Based on the Federal Acquisition Regulation code FAR 124.08 “Brokers are ineligible to participate in the 8(a) BD program. A broker is a concern that adds no material value to an item being supplied to a procuring activity or which does not take ownership or possession of or handle the item being procures with its own equipment or facilities”.

Recently we were hired by two separate clients who happen to be in the same line of work, distributors of office products. One was applying for the 8(a) certification, while the other for Metro’s Disadvantage Business Enterprise (DBE) Certification. In both instances, client did not feel that they were brokers as defined by the SBA, but rather a dealer. A broker is a pass through entity which at times makes commission paid to them by the manufacturer or distributor. In this case, both parties made neither. The only flaw they possessed was that they did not stock inventory. This is of course the most important rule of being a broker, that they don’t keep stock of their products.

The office supply industry is a multi billion dollar industry and both companies receive orders from all over the United States and their customers demand delivery promptly, sometimes the next day. If they were to stock inventory, take order from customers thousand of miles away and deliver the next day, Small Businesses in this particular industry would not exist. In order for them to be able to do this, they will need to have multiple warehouses across the nation and stocking hundreds of thousand of dollars worth of daily inventory. This would make perfect sense for a company such as Hewlett Packard or Amazon, but most definitely not a Small Business.

We were able to get both companies approved. We did this by proving to each agency, that keeping that level of inventory was not viable. Thus, we also provided the SBA and Metro with current levels of inventory held as well as receipts and invoices of purchase orders made. In addition, we provided the shipment charges made by the clients proving that their products were housed at the manufacturers warehouse and later shipped to the customer along with pictures of the inventory etc.

When applying for any type of certification, particularly the ones mentioned above, and if your business may be labeled as a broker but you clearly are not, an explanation will be needed. It is important to answer and questions they may have with actual data proving you are not a broker.

To learn more about our services, please visit www.sbclending.com.

 

Paul Mazbanian CEO Small Business Community Consultants, Inc. www.sbclending.com
Paul Mazbanian
CEO
Small Business Community Consultants, Inc.
www.sbclending.com

8a certification statistics

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The limited number of 8(a) Certified firms in the United States gives these firms the unique opportunity to bid on Federal Contract set asides. That means that only 8(a) certified firms are allowed to bid and win these contracts without any outside competition. This number is lowered even more as industry specific bids come in to play.

As of 5/20/2014 the SBA Los Angeles District office, which Covers the Counties of Los Angeles, Santa Barbara and Ventura has only 214 approved 8(a) firms in it’s database. An extremely low number when considering that there are thousands of businesses in Los Angeles alone.

As of 5/20/2014 the SBA’s Santa Ana District Office which covers Orange, Riverside and San Bernardino Counties only has 140 approved 8(a) firms in it’s database. 

As of 5/20/2014 the San Diego District Office which covers San Diego County, has only 164 approved 8(a) firms in it’s database.

Total Southern California Figures are roughly 518 approved firms.

In California, there are a total of 802 certified firms or 11% of all certified firms are represented by California.

In the United States, there are only 7,236 certified 8(a) firms.

Let’s do some math. If averaged out, each firm would be getting around $2,487,562 in annual contract work. Although this will never happen due to the majority of the firms being inactive in contract participation, it gives you an idea of how powerful having the 8(a) certification can be.

 

8(a) Certifications Data:

Los Angeles: 214

Santa Ana: 140

San Diego: 164

California: 802

United States: 7,236

*Figures provided by SBA’s Dynamic Small Business Search as of 5/20/2014.

 

Paul Mazbanian SBC Consultants, Inc. www.sbclending.com/ paul@sbclending.com/ 818-551-9400

Paul Mazbanian
SBC Consultants, Inc.
www.sbclending.com/
paul@sbclending.com/
818-551-9400

 

8(a) Economically Disadvantaged Explained

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The SBA 8(a) Certification, like other Certifications have rules an guidelines which each business must qualify for prior to applying. Below is the clarification on the Economically Disadvantaged Rule.

 Economically Disadvantaged:

A. Personal Income- The SBA requires that the Individual claiming Disadvantage must have a Personal Income less than $250,000 on average for the past 3 years. If the 3 year average is greater than $250k you are no eligible. Once admitted in to the program, this threshold increases to $350,000.

B. Personal Net Worth- The individual claiming disadvantage must not have a Personal Net Worth greater than $250,000. This does not include, the equity you possess in your personal residence, any retirement accounts you have or the equity in your business. The reason for this being, all of these assets are assumed to be used for your business at one time or another. However, if you do own Investment properties or other business, the equity in each will be calculated toward your personal net worth.

 

Paul Mazbanian SBC Consultants, Inc. www.sbclending.com/ paul@sbclending.com/ 818-551-9400

Paul Mazbanian
SBC Consultants, Inc.
www.sbclending.com/
paul@sbclending.com/
818-551-9400

 

Waiver of the SBA 8(a) 2 year rule

 

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For those applying for the SBA 8(a) Business Development program, you have heard of the 2 year rule. In this article I will be discussing the 5 steps an individual needs to take to waive the 2 year rule.

Not all businesses need to be in business for 2 years to apply for the 8(a) program. Some individuals may feel the need to become a part of the program prior to 2 years. The SBA feels that 2 years is a good amount of time for a business to gain experience and have enough revenue to participate successfully in the 8(a) program. But what if you dont have 2 years under your belt? What do you do? Do you wait or do you apply?

The SBA has 5 requirements that they recommend a business possesses when applying under the 2 year rule.

They Are:

1.        The individual or individuals upon whom eligibility is based have substantial business management experience.

2.        The applicant has demonstrated technical experience to carry out its business plan with a substantial likelihood for success if                         admitted to the 8(a) BD program.

3.        The applicant has adequate capital to sustain its operations and carry out its business plan as a Participant.

4.        The applicant has a record of successful performance on contracts from governmental or nongovernmental sources in its                                 primary industry category; and

5.        The applicant has, or can demonstrate its ability to timely obtain, the personnel, facilities, equipment, and any other requirements               needed to perform contracts as a Participant.

Please visit our website at www.sbclending.com/ to learn more about our services.

 

Paul Mazbanian SBC Consultants, Inc. www.sbclending.com/ paul@sbclending.com/ 818-551-9400

Paul Mazbanian
SBC Consultants, Inc.
www.sbclending.com/
paul@sbclending.com/
818-551-9400

Paul Mazbanian

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We receive a lot of calls weekly with clients asking us questions about the process we use and the experience we possess, so they may make the best calculated decision in hiring the best consultant possible.

What to look for when hiring a consultant.

1. Experience

2. Location

3. Price

EXPERIENCE:

The certification process is highly complex. A consultant must have the experience to understand each clients unique scenario. When speaking to a consultant, you should address these very important questions:

a. What process do you use to get us certified?

b. What kind of experience do you have in getting Businesses approved?

c.Where did you learn how to do certifications?

d.How successful have you been doing this?

LOCATION:

We recommend the consultant you hire be local to your business. This is crucial in optimizing efficiency in completing the certification. We do not recommend hiring a firm that is outside of driving distance from you. Some certifications will take between 20-40 hours to complete and the one on one time you get from a consultant is very important. A firm who is not able to meet with you one on one, will not be effective in completing the application for you. We have always made it a point to work with local companies, so that we can give them the best service and be most productive as possible. This is why we are so successful.

PRICE:

Price does not determine the experience one possesses to effectively complete any certification. It really comes down to what the Return on Investment will be for you as a business owner. We recommend hiring a consultant that has the most experience and has the pedigree to complete the certification in a timely and effective manner. It is worth paying a little extra for someone who has the experience to finish the project in a timely manner.

OUR EXPERIENCE:

As CEO and President of Small Business Community Consultants, Inc. I have always made it a point to be involved with every client from beginning to end. Due to the hands on approach I have instilled within the company, we have not had one single complaint about the services we provide. This is largely due to the the experience I have attained directly from the Small Business Administration and the one on one time every client gets.

We only work with companies who are local to us. There is no compromise when it comes to the customer service we strive to perfect for our clients. To learn more about our company please visit our website at www.sbclending.com/. To learn more about our certification services, please visit the certifications tab on the site.

Paul Mazbanian

Paul Mazbanian

Tel: (818) 551-9400

E-mail: paul@sbclending.com/

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Over the past 11 years, we have been assisting Small Businesses get Certified with either the Federal or State Government. Typical questions always comes up.

1. Why do I need to Be Certified?

2 . How will it help me?

3. How much Does it cost?

4. What We Recommend.

These are all very important questions of course, which all business owners deserve to know. In this article, we will try to answer these questions and hope that it will give you the ability to determine if indeed it ‘s worth it r not.

It is first important to understand that there are many different certifications available. There are Federal, State, County and City Certifications with different variations for different departments such as metro, airport commission etc. We will be speaking in general terms. Knowing which one would benefit you most is critical. This article will focus on the general topic of certifications.

1. WHY DO I NEED TO BE CERTIFIED?

For the more complex  Certifications such as the SBA (8a certification) or the States Disadvantage Business Enterprise (DBE) Certification, you will need to make a determination if you can bid and win contracts to increase revenues. These certifications are harder to get due to their complexity and more expensive if you desire to hire a professional consultant to guide you through the process. It is an investment, which if utilized correctly can prove to be very rewarding.

For the less complex Certifications, such as the Women Owned Small Business Contracting program (WOSB) there are two reasons to get the certifications.

1. contracting- To bid on Government jobs.

2.Marketing- Use it to market yourself as a Federally Certified Company.

2. HOW WILL IT HELP ME?

Small Businesses like us are always looking to find new revenue streams to increase sales. We sometimes add new services, give discounts etc. to entice people to buy or choose us and not our competitors. The Government has created programs to help Small Businesses compete in a more fair environment. They realize that the backbone of this economy are Small Business and if we don’t survive, its 2008 all over gain.

In order to keep things fair, the Government requires that all Federal, State and Local agencies give a percentage of their contracts to certified companies, disallowing large corporations to take part. For example, let’s say for argument sake that there are 1000 construction companies in the United States. 500 are 8a certified and 500 are not. Only the 500 that are 8a certified are able to bid on that particular contract reducing the competition to 50%.

3. HOW MUCH DOES IT COST?

This is a difficult question to answer. There are plenty of consultants out there who make money assisting businesses get certified for the different certifications. Depending on the complexity of the Certification price ranges will vary. For example, the SBA 8a Certification will be significantly more expensive then say the Women Owned Small Business Certification. There is certainly more work to be done and a lot more hours put in to the 8a compared to the WOSB.

4. WHAT WE RECOMMEND:

A. Work with a local firm: These Certifications require a lot of one on one time and proprietary information being shared, such as tax returns. A local firm can meet with you in person making the process easier.

B. Experience: The experience a firm hold is crucial in getting approved. It is always a benefit if the consultant has a certifications background but also educated in finance, accounting and law.

C. Return on Investment: What is the potential of increasing sales through contracts? If you are paying $1000 for a certification and the contract is for $10,000 is it worth it?

SBC Consultants, Inc is Government trained. We pride ourselves in working with only local firms giving us the ability to give the best customer service as possible. To learn more about our certifications please visit the certifications page on our website HERE.

Paul Mazbanian

Paul Mazbanian

CEO

Small Business Community Consultants, Inc.

Email: paul@sbclending.com/

Tel: (818) 551-9400

How to Obtain a FREE DUNS Number.

If any of you have tried obtaining any Federal Certification, you are already aware that the first step is to obtain a DUNS number. It is first important however to understand what a DUNS number is and what is it used for.

What is a DUNS Number?

Data Universal Numbering System also known as DUNS is regulated by Dun and Bradsreet (D&B).  D&B uses this unique 9 digit number to identify each business separately and to maintain their business credit standing.

Federal agencies will require a firm to have a DUNS number prior to becoming vendors with them. Getting a DUNS number is FREE although many companies will try to charge you up to $1,000 to get one.

Follow the following link:

https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm and begin the process. Once completed, a DUNS number will be assigned to you within 48 hours at NO CHARGE.

We encourage you not to trust firms who insist on charging for the DUNS number.

To learn more about Government Contracting and how to obtain a Federal or State Business Certification, please visit our website at www.sbclending.com/ and click on the Certifications link.

Paul Mazbanian

Tel: (818)551-9400

Email: Paul@sbclending.com/

The SBA 8A Certification

WHY OBTAIN THE 8A CERTIFICATION???

In our last article, I spoke about the 2 main reasons why a Women Owned Business should become Federally certified as a WOSB. The 8a certification, although has similar reasoning, there is one particular trait about it which makes it very special.
MONEY…. 23% of all Government contracts are required to be awarded to 8a certified firms. That is, all federal agencies, departments of agencies etc. are required by the Federal Government to give almost a quarter of their contracts to only 8a certified firms. This not only reduces the competition significantly it levels the playing field so that Small Business may complete more fairly.
Why Should Businesses Apply?
During the first term of the Obama administration, $376.2 billion in contracting dollars went to Small Businesses.  This is a $48.1 billion increase over the four preceding years even as we have reduced contracting spending overall. This tells us that the Government wants to help Small Businesses by giving them new opportunities to grow.
The Process:
The 8a process for those who have attempted it, know that it is quite lengthy. The average time it takes to complete the certification will vary between 20-40 hours depending on the business structure, its owners etc. Some of our clients who have attempted to complete it themselves have decide to hire us instead to avoid the headache of trying to understand the complexity of the program.
What We Do For You:
We ONLY consult with Los Angeles based companies. That keeps us local and will allow us to give the best service to our clients. They know we are just a few miles away and can call or meet with us as often as they would like.
*If you would like to learn more about the 8a certification, please visit the 8a LINK HERE: http://www.sbclending.com//services-8a-certifications.php.
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Paul Mazbanian

CEO

535 N. Brand Blvd. Suite 245

Glendale, CA 91203

Tel: 818-551-9400

Fax: 877-636-3792

The SBA Women Owned Small Business (WOSB) Contracting Program.

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Last year, I wrote about the basics of contracting and the 2 main Federal Certifications available to Small Businesses, the 8a Federal Contracting Program and the WOSB Program. In this article, I will be writing specifically about the Women Owned Small Business Contracting Program or the WOSB for short.

It is important to first understand that the Federal Government authorizes contracting officers to specifically limiting, or setting aside, certain requirements for competition solely between Women Owned Businesses. The Federal government MUST award 5% of its prime and subcontract dollars to women-owned small businesses.

What does this mean?

A whole lot of money. Since 5% of all funds must be awarded to Women Owned Businesses, only those who are recognized by the SBA as a Women Owned Small Business will be allowed to bid on these contracts. Hence, resulting in much less competition with a greater chance of winning the job. In addition, each Federal agency negotiates annual small business goals with the Small Business Administration (SBA) that presents, for that agency, the maximum practicable opportunity for small businesses.

The top 2 reasons Women Owned Businesses should become WOSB Certified:

1. If you are a women and own a business who may contract with the Government, this is a great way to increase your customer base and revenues. Think of it as a sorority you will belong to that only a hand full of businesses are a part of.

2. Whether you will be contracting with the Government or not, it is a great way to market your firm to potential customers as a Federally Certified Women Owned Small Business. Who wouldn’t want to do business with a Federally Certified Agency?

How SBC Consultants Helps you:

We have been trained by the SBA, which means that we have taken everything they do and applied it to our own clients. We know the ins and outs of the program and guarantee our clients CERTIFICATION. Visit our website today to see how we can help you become certified. http://www.sbclending.com//services-wosb-certifications.php

Paul Mazbanian

CEO

SBC Consultants Inc.

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What to Expect in 2013:

As 2012 passes us by and 2013 becomes reality, Business Owners are wondering what changes will take effect be in 2013 compared to 2012. Our answer is simple, a lot of the same old same old.

 Business Loans:

  • Lenders are always introducing new programs to entice Business Owners to apply, but the lending guidelines will not change. That is, as our April 18, 2012 article (http://sbclending.wordpress.com/2012/04/18/hello-world/) states, the 5 C’s of credit will very much be in effect. Lenders will continue to be strict in order to minimize their risk.

Business Certifications:

  • While lending guidelines continue to remain tight, Business Owners SHOULD always be thinking of ways to grow their customer base. Certified Companies will always have more opportunities then non-certified companies. That is, the Government has reserved new opportunities only to those businesses that are certified. Intern, those who are not certified will not be able to bid on that job. Here is a link to our Certifications page, we hope you will find it helpful. 

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