The Federal Government, with its agencies, aims to provide equal opportunities for people who wish to become entrepreneurs and make their living by running a business. In the world of business, many companies and owners face disadvantages brought by many factors.
To counter these disadvantages, the US government created the 8(a) business development program. The program is administered by the Small Business Administration (SBA). The main target of this program is to help small businesses in crises which are owned by minorities and socially or economically disadvantaged people in the marketplace.
The 8(a) business development program is an assistance program created via legislation. Its name derives from the section of the Small Business Investment Act of 1958. The act and section were made under the thought that federal contracts can be used as a tool to encourage growth in minority-owned businesses. The section authorizes the SBA to provide procurement assistance by releasing and granting prime and subcontractor contracts to its target businesses.
The program offers a lot of advantages. It helps the owners gain a foothold into the market, receive government contracts, expert advice and mentoring, counseling and training, financial assistance and other forms of assistance in technical and managerial areas.
The program runs for nine years and dived into two phases. The first phase runs for four years concentrating on development while the second stage is the transition phase, which comprises of the remaining five years. The first four years centers on helping business to develop using financial assistance. After four years, the development phase takes over. By this time, the business economic problems should be solved and the firm should be prepared to leave the program.
Prime Focus: The Owner
One requirement for eligibility is business administration or owner’s background. Participants should qualify either as a minority owner or a business owner who is considered classified as disadvantaged in social and economic aspect. Those in the latter category should present evidence that would qualify them as socially or economically disadvantaged. Some of the reasons for the disadvantage may be caused by the owner’s demographics or characteristics like gender, race, ethnicity, physical disability or residence from mainstream society.
Economic disadvantage can be based on the business’ financial situation, income and growth. These can be evidenced by presenting financial documentation.
Aside from being a minority or disadvantaged, owners must be American citizens with good character. Businesses that wish to enter this program must be certified.
The Procurement Side
The program is crafted with government procurement in mind. As such, procurement and contracts play a role in achieving its goals.
Procurement contracts in this program can be classified into two: ‘sole-source’ contracts and ‘set-aside’ contracts. In terms of sole-source contracts, the worth should be at $4 million for products and services while $6.5 million for manufacturing. All participants of the program are encouraged to bid on both types of contracts.
In terms of actual procuring or sourcing contracts, businesses can win a contract for their own business or join with another small business to bid and work on a contract. In an event of a joint venture, the business that gets the most part of the contract is called the ‘prime contractor’, while its partner is called a ‘subcontractor.’
Other Benefits
The program is centered on procurement but also has other benefits that businesses can take advantage of. Financial assistance, crucial thing to any kind of business, is one benefit that businesses can enjoy. The 8(a) business development program offers business loans and grants for business. Loans and guaranteed bonds are given through the SBA while grants are available via the SBA resource partners.
Another SBA program bridging to this program is the Mentor-Protégé Program. As the name implies, the program is designed to partner two firms with one acting as a mentor and the other the protégé. Mentor firms can offer a lot from development or operating assistance to financial and even procurement (with the protégé as a subcontractor on a contract).
Monitoring
During that period of nine years, checks will be made to ensure that the enlisted firms are doing well and making progress. Firms will undergo annual reviews for their performance, as well as systematic evaluations and submit a business plan for the future.
In a Nutshell
The program, like many other government assistance programs, is definitely a big help for many struggling businesses. It gives an opportunity for any disadvantages firms to get back on track and receive some badly-needed assistance. To sum, the 8(a) business development program is a great business package assistance for any business and perhaps, unrivaled on its own.
8a is a wonderful program, it helps to level the playing field but we must keep moving forward. More opportunities exist for US small businesses.