COVID Bonus Year
The National Defense Authorization Act this year has a provision to increase the duration of time in the 8(a) BD Program for firms that joined prior to September of 2020. Although firms that become 8(a) certified after this date will we back to the standard nine-year time frame, this could open the door for future changes to the SBA’s 8(a) BD Program regarding the nine-year program eligibility period.
Large Increase in Applications
The SBA is currently seeing a large increase in the number of 8(a) applications. It has been surmised that this is because small businesses are looking to government for revenue until the economy stabilizes from the COVID-19 pandemic. Additionally, the increase of the thresholds for an individual being classified as economically disadvantaged has opened the certification to many individuals that did not qualify in the past.
Economic Disadvantage Threshold Changes
In July of 2020 the SBA increased the Economic Disadvantage Thresholds.
Personal Income – An individual applying for 8(a) in the past could average $250,000 per year for the past three years or $750,000 in cumulative earnings over the three-year period. This has been increased to a $350,000 per year average or $1,050,000 cumulative earnings.
Personal Net Worth – Prior to July 2020, an individual’s net worth had to be less than $250,000 excluding a) Primary Residence; b) Retirement Accounts; and c) The value of the business applying for the 8(a) Certification. This net worth amount has been increased from $250,000 to $750,000.
Total Assets – Before the change in July, an individual’s assets had to be less than $4MM. Post change, this amount has increased to $6MM, and also excludes retirement accounts.
Biden Administration Increasing 8(a) Goals
The Presidential election has not been fully adjudicated, and I am not opining on the results. However, Joe Biden has stated that a goal of his administration is to raise the congressional targets for agencies from 5% to 15% over a five-year period. Currently, most agencies hit around 8-9% of their spending with 8(a) firms. However, all agencies exceed the 5% target, so this move would increase 8(a) sales by tens of billions of dollars per year.
I believe that moving forward, things are looking good for 8(a) BD Program participants regardless of the election results, and it will continue to be one of the most important certifications a business can obtain.
If you are wondering how an 8(a) Certification (or any other federal or state business certification) could be a huge advantage to help expand your business development potential through federal contracting, I always recommend contacting an industry expert. ez8a and Advance 8a are two such consultants that have the expertise in evaluating your firm's potential, and then help get you there. Neither charge for an initial consultation.