The SBA is weighing a possible rule change in the 8(a) BD Program for 2020. Below is the likely change:

Net Worth

Current - $250,000 - Excluding:  primary residence, business concern applying for 8(a), and personal residence.

Proposed - $750,000 - Excluding:  primary residence, business concern applying for 8(a), and personal residence.

Income (AGI)

Current - $250,000 average past three years (with some exclusions).

Proposed - $350,000 average past three years (with some exclusions).

Assets

Current - $4,000,000 - Includes personal residence and value of the business.

Proposed - $6,000,000 - Includes personal residence and value of the business.

Logic for Rule Change

This rule change is being brought about because the SBA wants congruity between the EDWOSB (Economically Disadvantaged Woman Owned Small Business Certification) and the 8(a) Certification. This was brought about by the SBA’s review of the WOSB (Woman Owned Small Business) self-certification process and control deficiencies found in that program.

This congruity avoids the “the anomaly of a concern applying for EDWOSB and 8(a) BD status simultaneously and being found to be economically disadvantaged for EDWOSB purposes, but denied eligibility for the 8(a) BD program based on not being economically disadvantaged.”

Original Logic

The original logic for the limits on net worth, income and assets was to keep the top 1% of income and wealth holders out of the 8(a) BD Certification program. The thought was that these individuals had already overcome any economic disadvantage they suffered due to discrimination or gender bias. Therefore, this rule change is a change in this thinking at the SBA.

If the rule is approved, the dollar amounts for initial 8(a) economic disadvantage eligibility would increase quite a bit. This would make more people economically eligible and increase the popularity of the 8(a) BD Program. This rule could likely go into effect in January of 2020.