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Waiver of the SBA 8(a) 2 year rule

 

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(818)551-9400

 

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

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Most people don’t understand how becoming certified as an 8(a) firm can help propel their business to the next stage of success. Becoming approved as an 8(a) firm is like being in a fraternity or sorority. Those who have had those great experiences in college know that it is a brotherhood or sisterhood. They help each other, can understand each others needs and struggles etc. To date, there are only 10,000 approved 8(a) firms in the Unites States. You can just imagine from all the millions of Small Business in the United States what a small fraction that is. That being said, let’s get down and dirty with some hard core facts about why Minority owned businesses need to get certified.

The 8(a) program was created in order to give minority owned business a fair opportunity to bid against larger firms. The United States Government feels that Minorities in this country have not had the same opportunities that non-minorities have had. In order for Minorities to compete in a specific Industry, the Government has created programs, and if utilized correctly, can help advance a Minority Owned Business.

One of those programs, and the largest one at that, is the 8(a) Business Development Program.

FACTS ABOUT THE 8(A) PROGRAM:

  1. The 8(a) program has been dedicated 5% of all Federal procurement budgets. This means that $18.5 Billion dollars a year is reserved for 8(a) certified firms.
  2. Sole-Sourcing Contracts: This is the most attractive to me. $8.5 Billion Dollars is given to sole source awards. That is, a firm does not compete with any other firms. Even 8(a) firms. It is awarded solely to them. (More on how to get sole-source awards toward the bottom).
  3. Competitive 8(a): The remaining 10 Billion  Dollars are up for bidding between 8(certified) firms only.

More on Sole Source Awards:

In order for an 8(a) firm to be eligible for sole source awards, they need to have experience in the 8(a) program and plenty of it.  The Government wants to make sure that the sole source awards are given to firms who have been successful in the program and can handle the work load given to them.

How do you get sole source awards?

First, new firms need to gain experience by entering joint venture agreements with other firms or by entering mentor-protege agreements provided the 8(a) firm does 40% of the work and makes 40% of the profits. By working this way for some time, it helps the firm in to becoming a Federal Prime Contractor. Once you have worked as a prime contractor and proven yourself, you will then be able to get sole source contracts.

Limits for Sole Source Contracts:

1. $4 million fir products/services

2. $6 Million for manufacturing

I hope the above explained the REAL benefits in getting an 8(a) Certifications. It is not easy by all means but if there is a will, there is a way.

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

www.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