Small Business Trends

New SBA Proposed Regulations Strengthen the 8(a) Program

Announcements, Economic TrendsNovember 3, 2009By Rieva Lesonsky

Help for struggling small businessesThe Small Business Administration has been quite busy. They just announced proposals that improve the 8(a) Business Development Program for disadvantaged small businesses.

The proposed 8(a) regulation changes were made after the first comprehensive review of the 8(a) program in several years. The public comment period on the proposed changes is open for 60 days.

According to SBA Administrator Karen Mills the proposed changes build on the program’s “foundation of success.” Mills says, “The 8(a) program has a proven record as an effective program for helping disadvantaged small businesses gain access to training and contracting opportunities to help them grow, create jobs and ultimately succeed in the marketplace once they graduate from the program.”

Essentially, 8(a) helps businesses that meet the SBA’s criteria for being socially and economically disadvantaged. To help small businesses grow, they get business training and counseling, help with their marketing and executive development and access to government contracting opportunities. In fiscal 2008, small businesses received over $16 billion in 8(a) contracts.

Specifically, some of the proposed changes include:

  • Economic Disadvantage: The proposal adjusts how assets, gross income and retirement savings are taken into account when assessing whether a company is economically disadvantaged. For example, the changes would exclude retirement account assets from the net worth calculations that are used in admitting businesses to the program, broadening 8(a)’s reach.
  • Ownership and Control Requirements: The proposed changes would allow greater flexibility in admitting immediate family members of current and former 8(a) participants into the program.
  • Joint Ventures: Among other changes, the proposal would require 8(a) firms to perform at least 40 percent of the work on joint ventures, rather than subcontracting it out to large businesses.

You can view details of the proposed rule in the Federal Register.

The SBA is accepting comments on the proposed regulation changes until December 28, 2009. You can submit comments to Regulations.gov, e-mail them to 8aBD2@sba.gov, or mail them to 409 3rd St. SW, Mail Code: 6610, Washington, DC 20416.

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About the Author: Rieva Lesonsky is CEO of GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America ’s entrepreneurs for nearly 30 years. Follow her on Twitter @Rieva and visit SmallBizDaily to read more of her insights on small business.

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