8a Economic Disadvantage Narrative Statement-- What Does Socially Disadvantaged Mean?

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When you submit an SBA 8a application, part of the process requires you to write a Narrative Statement of Social Disadvantage (Social Disadvantage Narrative). This only applies if you do not meet the meet the statutory presumption of being socially disadvantaged. Not all applicants require a narrative statement of economic disadvantage.

Although you may have suffered socially, non-protected classes under the SBA 8a regulations can still be approved. However, compiling the details while still meeting the legal standard can be a difficult and confusing task. Understanding the basics can be helpful.

What does socially disadvantaged mean if needed by SBA?  To meet the 8a Program eligibility requirements and to gain entry into the 8a Program, your social narrative must show that your business entity is unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of “good character,” are citizens of the United States, and who can show the potential for business success. 13 CFR 124.101.

  • The SBA has great deference in deciding the above issues
  • Knowing how to write a narrative statement of economic disadvantage means having a thorough understanding of what the SBA is really looking for.
  • There are many court cases that actually get into the various nuances. If you are not familiar with the concepts of being a disadvantaged person, then you should seek professional help.

The presumption that you are socially disadvantaged can be challenged. If you are not part of the members that are presumed disadvantaged, you must write a narrative that shows that:

  • You have at least one objective distinguishing feature that has contributed to your social disadvantage;
  • You have personally experienced substantial and chronic social disadvantage in the United States because of that distinguishing feature; and
  • The disadvantage has negatively affected your entry into or advancement in the business world.  See 13 CFR 124.103(c).

Economic and Social Disadvantage Narrative Statement Topics

The SBA has reduced requirement for an 8a Economic Disadvantage Narrative Statement– What Does Socially Disadvantaged Mean?.

When writing a convincing a social disadvantage narrative statement for 8a certification,  meeting the legal definition of “socially disadvantaged” can be somewhat tricky.  The SBA looks at applicants to see if they can be seen as someone who has been “subjected to racial or ethnic prejudice or cultural bias within American society.”  8a applicants must provide substantial detail about how your experiences impacted them. This is one critical area where 8a applicants fail. See 8a contractors list of supporting documents.

To be sufficiently detailed, your SBA 8a social narrative statement of social disadvantage status must introduce the claim to generally describe:

  • When and where the incident occurred;
  • Who was involved;
  • How the incident occurred; and
  • How you were adversely affected by the incident.

Social Disadvantage Statement– Burden of Proof

The legal standard of showing your social disadvantage status that 8a applicants must meet is by “a preponderance of the evidence. When writing a social narrative statement you are not required to convince the SBA that an incident was motivated by bias. Instead, stick to the facts and details.  Many 8a applicants have a hard time mustering the relevant facts.

  • You want to include more detail than too little.
  • Making conclusory statements will get your 8a application denied.

Supporting evidence is crucial. Your Social Narrative Statement of Social Disadvantage should only contain evidence sufficient to lead the SBA to conclude that more likely than not bias was a reason. Applicants should try to include as much corroborating evidence as possible. Affidavits, letters or reports can be beneficial.

  • Your 8a Narrative Statement of Economic Disadvantage – What Does Socially Disadvantaged Mean? should be analyzed to see if your claimed chronic and substantial social disadvantage incident was brought about by the claimed bias. See Southern Aire, SBA No. BDP-453, at 12-13.
  • To be socially disadvantaged, you must show “the quality and measure of evidence necessary to meet the preponderance of the evidence standard in supporting your case of social disadvantage.”
  • Your social narratives do not need to prove social disadvantage along all three metrics. Instead, they should have a showing of negative impact caused by substantial and chronic bias in your employment history.

Common Topics that the SBA May Consider

Per  the Legal Information Institute, the SBA can consider the following:

Education. SBA considers such factors as denial of equal access to institutions of higher education, exclusion from social and professional association with students or teachers, denial of educational honors rightfully earned, and social patterns or pressures which discouraged the individual from pursuing a professional or business education.

Employment. SBA considers such factors as unequal treatment in hiring, promotions and other aspects of professional advancement, pay and fringe benefits, and other terms and conditions of employment; retaliatory or discriminatory behavior by an employer; and social patterns or pressures which have channeled the individual into nonprofessional or non-business fields.

Business history. SBA considers such factors as unequal access to credit or capital, acquisition of credit or capital under commercially unfavorable circumstances, unequal treatment in opportunities for government contracts or other work, unequal treatment by potential customers and business associates, and exclusion from business or professional organizations.

SBA sometimes makes mistakes

When evaluating your 8a application,  the SBA is free to consider lack of corroboration while weighing the evidence. However, it cannot deny a claim simply because it has not been corroborated. SBA OHA has addressed this very issue on appeal.

  • Evidence that has not been contested by the SBA must be accepted as true. 
  • Social narratives do not have to give conclusive proof of an event. However, the event must be presented in enough detail to be evaluated.
  • Case law shows that the SBA has sometimes failed to apply the correct test for proving chronic and substantial bias

Discrimination Allegations in Social Disadvantage Narratives

Under SBA regulations, you can describe your discrimination experiences. However, you want to be very specific and factual in your social disadvantage narrative. Writing general statements will not meet your burden of proof.

The SBA will use the “the totality of the evidence” standard to see if the experienced discriminatory practices in the areas of education, employment, or business history have had a negative impact on your entry into or advancement in the business world.” 

The rules for writing an SBA Social Narrative Statement for Social Disadvantage status can become very complex. 

  • Most Narrative Statements of Social Disadvantage in 8a certification applications show some level of discrimination. When preparing your application, Social Disadvantage Statement must show the level of discrimination, consistent over a period of time, and should show that how the discriminatory acts prevented you from meeting a certain goal.
  • You must speak to your experiences. If not, the SBA will deny your application.

Socially Disadvantage Members of Designated Groups – 13 CFR 124.103

There is a rebuttable presumption ( if there are allegations, then you can rebut them) that the following individuals are socially disadvantaged: Black Americans; Hispanic Americans; Native Americans (Alaska Natives, Native Hawaiians, or enrolled members of a Federally or State recognized Indian Tribe); Asian Pacific Americans (persons with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, or Nauru); Subcontinent Asian Americans (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal); and members of other groups designated from time to time by SBA according to procedures set forth at paragraph (d) of this section. Being born in a country does not, by itself, suffice to make the birth country an individual’s country of origin for purposes of being included within a designated group.

Reduce Risk of Denial -- Get a Free Copy of Your 8a Application Checklist

Increase your chances of getting 8a certified and overcoming hurdles in getting small disadvantaged business certified by submitting a sound statement of economic disadvantage or social disadvantage narrative. For help on how to write narrative statement of economic disadvantage, call our SBA 8a certification  consultants 1-866-601-5518 for help with your SBA social narrative statement. FREE INITIAL CONSULTATION.

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