The firm's potential to fulfill federal contracts is a crucial component of the 8(a) Certification. It is intended so that by doing this, novice companies won't win contracts that are so huge that they can’t fulfill them, thus bankrupting the startup company. To solve this problem, either start with smaller projects and scale them up over time, or collaborate on projects with other businesses. Without a significant amount of funding, it is typically impossible for a new company to reach the annual average of $6 Million in federal revenue. The solutions to the two-year business requirement are listed below.
Traditional Application
Two-Year Requirement
Before submitting an 8(a) application, the company must have been in operation for at least two years.
SBA Defines the Start Date for Your Business
According to SBA regulations, the company's start date must have coincided with the filing of a tax return and the generation of revenue in that particular year. Additionally, the firm must have continuous revenue in each subsequent year from that start date or the process will reset.
Application w/ Waiver
Two-Year Waiver
The SBA does offer a two-year waiver if the business can meet certain criteria to demonstrate the firm is successful enough to warrant early admission into the program.
Applying with Less Than Two Years in Business
According to my experience dealing with the SBA, the following are the requirements for the SBA to approve an 8(a) application early for companies who have a solid company history and wish to enter the federal contracting market:
1. The company has a single tax return for the business that shows both revenue and profit.
2. The company's total revenue since its founding (i.e., since the company's beginning) exceeds $150,000.
3. The owner's resume demonstrates that they are qualified to run a business.
4. The owner complies with all other 8(a) standards, including working full-time for the company.
In my experience, the SBA acts in a very fair and logical manner. A company should be confident that its application will be accepted if they meet the two-year waiver criteria and the 8(a) Certification is a key component of its long-term strategic marketing plan.
If you are interested in exploring the 8(a) Certification, or would like to exacerbate the potential if you have already received yours, I always recommend contacting an industry expert such as ez8a or Advance 8a. Call them so you can talk about your specific scenario and determine whether an 8(a) Certification will enable you to grow and expand your firm through federal contracting. Neither charge for an initial consultation.
Comment