SBA Certified Small Disadvantaged Business – SDB Certification

Learn How to Avoid the Most Costly Legal Mistakes. Call Us For Immediate Help. 1.866.601.5518. Help in ALL States.

The Small Business Administration (SBA) small disadvantaged business SDB definition identifies socially disadvantaged individuals as people that have been subjected to8a Small Disadvantaged Business & SBA SDB Certification “racial or ethnic prejudice or cultural bias.” National origins that are presumed to the socially disadvantaged are: African Americans, Asian Pacific Americans, Hispanic Americans, Native Americans and Subcontinent Asian Americans. Members of other groups may qualify if they can satisfactorily demonstrate that they meet established criteria.

To become an SBA certified 8(a) small disadvantaged business, economically disadvantaged individuals must meet the SBA definition of small disadvantaged business by showing that they have impaired access to financial opportunities has hampered the ability to compete in the free enterprise system when compared to people in similar businesses who are not identified as socially disadvantaged.  To get SDB   certification, you do not have to submit an application to SBA for SDB status. Instead, you can self-certify. Problems can arise if your status is later challenged.

To become an 8a certified small business (SBA SDB certification) under SBA regulations you also must show that you are both socially disadvantaged and economically disadvantaged. SBA has now relaxed its requirements for narratives. Although companies may become a self-certified small disadvantaged business, they must still be prepared to prove their status when challenged by a competitor and submit a small business self-certification statement.

Avoid Problems With Small Business Economic Disadvantage for  8(a) Applicants?

The SBA looks at a series of issues when making a decision as to whether or not your claims of being a small disadvantaged business and whether you can meet the requirements of 13 CFR 124.104 (c).

Getting your small disadvantaged business certification means that the SBA looks into your personal financial condition is critical to receiving your small disadvantaged Status.

13 CFR 124.104(c) shows that the SBA will always evaluate your alleged claims of being economically disadvantaged by considering: . . . factors relating to your personal financial condition when claiming small disadvantaged business status, including personal income for the past three years, personal net worth, and the fair market value of all assets, whether encumbered or not.

  • If you exceed any one of the stated thresholds for personal income, personal net worth, or total assets, the SBA will then impute access to credit and capital and not economically disadvantaged.

How Does Net Worth Problems Impact Your Ability to Overcome an SBA Certified Small Disadvantaged Business and 8(a) Status?

Meeting the SBA’s Net worth requirements poses a challenge for many SDB certification applicants. In order to become an SBA certified small disadvantaged business, your net worth has to be less than $250,000. Many companies fail in this area mostly because of improper calculations or not understanding how the SBA imputes additional income to you in certain situations. Having an experienced 8a consultant that understands the ins and outs of how to become an SBA 8a small disadvantaged business is essential to your success.

Even if the SBA denies your SDB status or your 8(a) application, you have to prove on appeal to SBA OHA that the SBA’s decision was arbitrary, capricious, and contrary to law.

Common problems that you have to avoid include:

  • failure to properly adjust net worth for a bona fide debt;
  • error in calculations
  • misevaluation of transactions such as purchase agreements.

Tip: When calculating the amount of  your personal net worth for small disadvantaged business certification and 8(a) eligibility, a loan from you to your business is an asset to you the owner.” Computer One. Inc., SBA No. BDP-148 (2001); Matter of Logicare, Inc., SBA No. MSB-576 (1997).

You always want to make sure that the calculation of revenues and net worth amounts do not expose you to costly mistakes. Instead, learn how to improve your chances of getting approved.

Small Business Assistance – How We Can Help Getting SDB Certified

At Watson & Associates LLC, our  SBA 8a certification consultants help small businesses to provide the SBA with relevant information to become small disadvantaged business SDB certified. With over 30 years of combined experience in federal government contracting, we work with small business owners to make sure that they meet and comply with SBA 8a certification regulations while protecting their bottom line.

  • We help companies to establish DBE and MBE ownership AND control requirements
  • Our small disadvantaged business certification lawyers and consultants help 8(a) applicants to avoid SBA affiliation under 13 CFR 121.103 and 13 CFR 124.513.
  • We represent companies involved in small business size protests with their small business certification statement
  • We consult with small business owners about Ostensible Subcontractor rules and how to avoid costly legal mistakes.

For immediate small business assistance with becoming an SBA certified SDB, call us today for immediate help. 1-866-601-5518.

What is a small disadvantaged business – What are 8a Certified Small Business Requirements? 

Whether or not you are a self-certified small disadvantaged business, to become an SBA 8a SDB business, applicants must meet the following definition of “small business” to become certified.

  • At least 51 percent unconditionally owned by one or more socially and economically disadvantaged individuals as set forth.
  • Although companies can self-certify themselves as a small disadvantaged business, they cannot self-certify as 8a SBA SDB certified.
  • Individuals claiming 8a disadvantaged business status must be a citizen of the United States
  • In assessing the personal financial condition of an individual claiming to be an SDB certified enterprise, and economic disadvantage, his or her net worth must be less than $750,000 after taking into account the exclusions set forth in 13 CFR 124.104(c)(2).
  • For purposes of getting SBA certification, the applicable NAICS code is that which relates to the primary business activity of your company.

Some small business concerns think that if their company is state-approved for Disadvantaged Business Enterprise status by their state or other entity, then they automatically become eligible for SBA’s certification. This is not so. Each federal agency’s definition and qualification requirements are different. Also, an 8a graduates from the 8a program after 9 years.

8(a) Small Disadvantaged Business Certification- Other Socially Disadvantaged Individuals

sba regulationsAccording to the SBA, Other individuals may similarly be found socially disadvantaged and eligible for the small disadvantaged business certification program on a case-by-case basis. SBA has reduced the requirements to submit narratives.

An individual who is not a member of one of the presumed groups can be admitted into the 8(a) Business Development program.  

To do so, the business must prove to SBA that the individual(s) meeting SBA’s ownership and control requirements is socially disadvantaged. This process includes showing personal experiences where applicable in education, employment, and business history.

See also information on SBA 8a annual report, SBA form 601 and SBA Form 1450.

Additional SBA SDB Certification Information to Get SDB Certified

  • Potential for success not required for SBA SDB business certification. 
  • Ownership restrictions for non-disadvantaged individuals. The ownership restrictions in 13 CFR 124.105 (g) and (h) for non-disadvantaged individuals and concerns do not apply for purposes of determining 8a SDB eligibility.
  • Full-time requirement for SBA SDB Certification purposes. As an SBA SDB certified, you must manage your company on a full-time basis as the qualifying member. You have to work for the company during all of the hours the concern operates.

Get Your Free 8a Certification Checklist

For small disadvantaged business certification assistance and getting SBA SDB certified or for help with your SBA Section 8(a) certification application, call the 8a disadvantaged business consultants and attorneys at Watson & Associates, LLC. 1-866-601-5518. We offer a FREE INITIAL CONSULTATION.