Avoid Common Problems in the SBA 8a Certification Application Process
During the 8a certification process, the SBA scrutinizes each 8a application to ensure that the applicant meets the statutory requirement for certification. The public is usually not told of the detailed requirements for certification. As a result, many 8a certification packages are denied for several reasons.
Knowing the 8(a) Program Rules Reduces Stress in the Application Process: The SBA digs deep into your answers to questions during the 8a certification process. Very few applicants that apply on their own get an approval the first time around.
If you encounter a consultant that guarantees you approval, then beware and move on.
- No one can promise SBA approval.
- The key to success int he 8a application process is to know how the SBA looks at each part of the application.
For you to be an expert in the approval process you would simply have to know the laws and rules. This is virtually impossible.
How Do You Position Your Business Structure to Avoid Red Flags? The SBA 8a certification process requires the qualifying disadvantaged applicant to demonstrate that he or she is totally in control of the business.
- Red flags can include operating agreements that show a disadvantaged owner actually making the final decisions on the key aspects of the business.
- Applicants want to ensure that voting rights and management are ultimately vested in the qualifying disadvantaged member.
- Any other reflections will prompt red flags and cost you disapproval.
How Do You Demonstrate the Ability to Succeed in the 8a Program? This is yet another frequent hurdle that most applicants find in the SBA 8a Certification Process. Being broke is not the way you want to go during the certification process.
- Instead, you want to show the SBA that you have more than one existing client (too much revenue from one client can cause problems).
- You also want to show profit during the past three years. If not, you want to explain the ups and downs.
- It is advisable to seek lines of credit to better position yourself.
- Adequate finances and existing business are two main factors for you to consider in the SBA 8a Certification Process.
Does Buying an Existing Business Affect My 8a Certification Application? Generally not. You must be able to provide the pertinent purchase documents in your certification application package, show that shares are transferred and that the buyer is totally in control of the business.
- Transfer of ownership between spouses are suspect in the SBA 8a Certification Process.
- You must ensure that the new owner shows the requisite managerial experience (resume and or certifications) to take over and run the business.
- If you are relying on a minority transfer only to get you through the application process, you will more than likely be denied.
How Do I Prove My Economic Disadvantaged Status In The SBA 8a Certification Process?
- A simple road map would be to begin your economic narrative with your early childhood background and highlighting specific examples of where access to proper education systems were part of your experience.
Experts that provide 8a certification services understand the critical aspect of the SBA 8a certification process.
- You should consider discussing financial hardships of your parents if applicable. Did you pay your way through school while working? How did such a tough experience impact your life? You can then describe your application and denial of loans – give specific examples. Get Affidavits from people with personal knowledge. Did your business compete for work but never succeeded? This is relevant evidence of your barrier to mainstream commercial and financial resources.
Survival After Approval: After you have survived the SBA 8a certification process, you are mandated to abide by strict rules. See 13 CFR 124.
- You must submit annual reviews and financials;
- You must show efforts to acquire non 8a work;
- You must also show that you dedicate full-time efforts to the business, and
- You must provide information or changes to your original 8a application.
- Failure to respond to the SBA, inadvertent mistakes can cost you a termination from the 8a program.
If you are seeking expert advice in the SBA 8a certification process, contact Watson & Associates LLC for a free initial consultation. Call Toll Free 1-866-601-5518 or simply call our 8a certification consultants.