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The SBA announced last week a major change in the way they would be calculating who is economically disadvantaged going forward, mirroring the 8(a) Programs qualifications with the EDWOSB program. These changes will increase the number of firms able to apply for the 8(a) Certification.
Effective Date: July 15, 2020
8(a) Rule Changes
|
Economic Disadvantage Rule |
Prior Rule |
New Rule |
|
|
Less than $250,000 on average for the past 3 years |
Less than $350,000 on average for the past 3 years |
|
Adjusted Net Worth |
Less than $250,000 Excluding: personal residence; retirement accounts, value of the business. |
Less than $750,000 Excluding: personal residence; retirement accounts, value of the business. |
|
Total Assets |
Less than $4,000,000 Excluding: retirement accounts |
Less than $6,000,000 Excluding: retirement accounts |
In my experience with 8(a) applications prior to this rule change, the majority of firms that failed to meet the criteria for being economically disadvantaged did so because they failed to meet the second rule, Adjusted Net Worth. With this standard increasing to $750,000, it should open the door to many applicants that in the past were disqualified due to having an Adjusted Net Worth that was too high.
If you have any additional questions about this, or when it comes to getting qualified for an 8(a) Certification, I always recommend contacting an industry expert such as ez8a. They can be reached at (859)442-3300. They do not charge for this initial consultation.
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