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The United States Federal government is the largest purchaser of products and services in the world, with companies of all sizes included within its vendor lists. It’s easier than you may realize for small businesses to compete for — and win — a share of the $500 billion in annual government contracts.
The Small Business Administration (SBA) was formed in 1953 with the mandate to assist small businesses in working with federal contracting, with the ultimate goal of awarding 23% of all contracts to small businesses. The SBA recognizes that small businesses are the lifeblood of the American economy, and government contracting is a great way for them to grow and develop.
To that end, the SBA provides outreach programs, matchmaking events, and online training opportunities, and many other programs designed to help small businesses identify and pursue contracting opportunities. In addition, the federal government has lucrative “set aside” programs: contracts exclusively awarded to certified small businesses.
To qualify for government contracts, small businesses must prove to the contracting agency that they are ready, willing, and most importantly, able to perform on government contracts by obtaining the necessary certification. It’s not an easy process, but there are a variety of certifications that small businesses can apply for and obtain:
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SBA 8(a) Business Development Program: The 8(a) certification is a highly sought after nine-year business development program established to assist socially and economically disadvantaged individuals grow their businesses through counseling, training, workshops, business matchmaking opportunities, mentoring, and other guidance.
The Small Business Association’s 8(a) Business Development Program certifications are among the most coveted certifications available to small business owners. The ultimate goal of the program is to help small businesses become much larger through government contracting and mentorship from a larger business in the same industry.
To qualify, the company must be at least 51% owned by socially and economically disadvantaged individuals (African American, Asian, Hispanic, and American Indian). The program is divided into two phases over a 9 year period: a four year developmental period and a five year transition period.
8(a) certified businesses can receive sole-source contracts for up to $4 million for goods and services and up to $6.5 million for manufacturing. Additionally, one of the best features of the program is the ability of 8(a) certified firms to receive subcontracts from larger prime contractors, allowing both companies to benefit tremendously. Participants in the program can receive up to $100 million dollars in sole-source contracts!
Another great aspect of 8(a) certification is the Mentor-Protégé program. This allows the small business to receive business development assistance from a more mature firm with the goal of enhancing the capabilities of the 8(a) company.
The 8(a) program has a number of qualification requirements:
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Two years in business (or a waiver)
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Majority owned by a socially and economically disadvantaged individual
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Never participated in the 8(a) program before
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Business integrity for majority owner and any partners
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No franchises, brokers, or non-profits
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Full time employment at 8(a) applicant firm
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No partnerships with other 8(a) firms
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No defaults on SBA loans, bankruptcies, or student loans
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Must be US citizen or naturalized
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No parole or probation
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Must be defined as a small business
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Must have a variety of contracts, both private and public, and no one client account for more that 50% of revenue
Please contact us if you would like to see if you pre-qualify!
The 8(a) Certification requirements are lengthy, but Cayenne’s expertise can ease the application process. We can help develop and organize all of the following for your 8(a) program application:
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Up to Date Tax Returns for three years. both personal and company.
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Business History.
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Financials for the last three years and current year.
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Organizational Documents.
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Corporate Documents.
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Management Resumes.
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Birth certificate.
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A variety of contracts from a variety of clients.
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List of contracts for the last three years.
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Personal net worth information.
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Banking information.
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Business should be at least two years old.
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Owners may not have a net worth over $750 or 6 million in assets.
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Explanations if any bankruptcies or arrests.
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Your SAM registration must be current and consistent with your other business documents:
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Make sure the address is correct.
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Make sure your DUNs and all addresses are consistent and correct.
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Make sure your NAICS codes are correct and reflect most of the business that you engage in.
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Your NAICS in SAM must be the same as the NAICS on your company taxes or you will need to submit a letter of explanation from your accountant. To be successful, these codes must also match the NAICS of most of your jobs for the last year, or the last 3 years.
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Order certificate of good standing from your state.
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Make sure you have all of your corporate documents including Articles of incorporation and Certificate of incorporation.
This list of requirements can definitely look overwhelming. Let Cayenne Consulting help you with your 8(a) certification so you can focus on running your business. Just complete the form below and we can have a no-obligation conversation to see if you might qualify. The 8(a) program is one of the best things you can do for yourself and your small business, both now and in the years to come!
How difficult is it to get the 8(a) certification?
Obtaining the certification is a marathon, not a sprint, and can take up to 9 months depending on the strength of your initial application and documents. In 2020 there were fewer than 9000 companies certified as 8(a) in the US.
What does it cost to get certified?
There is no fee payable to the SBA, either before or after certification.
Where do I apply for 8(a) certification, and what does the process look like?
To apply you must submit an application at certify.sba.gov. Once you apply, your application goes through two tiers of review before it goes to Washington DC for final determination.
What does “Super 8(a)” mean?
Super 8(a) businesses are owned by Native American Tribes, Alaskan Native Corporations, and Native Hawaiian Organizations, and come with the extra requirement that the business be located in an economically disadvantaged area.
Is it worth the effort to become an 8(a) certified firm?
That depends on your target market. If you make a product or provide a service that isn’t in demand by the federal government, it may not make sense to seek the certification. To survey the opportunities before you apply, visit beta.SAM.gov for contract opportunities, data reports, wage determinations, assistance listings, and the Federal hierarchy.
How do I know if I qualify and if it will be worth it to me and my company?
Contact LG Professional Contractsl for pre-qualification and target market determination.
How much does it cost to bid on a Federal RFP or contract proposal?
As a general rule of thumb, it takes about 3-4% of the contract to put together the proposal, but that can vary.
HUBZone stands for Historically Underutilized Business Zones, referring to small businesses that reside in underperforming business zones. Being a certified HUBZone business qualifies owners to contract preferences and access to federal contracting opportunities.
The program works by providing HUBZone maps business owners can use to determine their eligibility, while the government maintains a list of qualifying businesses that federal agencies can use as vendors. HUBZone certified companies can receive competitive and sole source contracting opportunities as well as subcontracting. The goal of this program is to ensure 3% of all federal prime contracts go to HUBZone certified firms.
Some of the eligibility requirements include:
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SBA standard small business
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Owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, an agricultural cooperative, or an Indian tribe
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Its principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act
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At least 35% of its employees must reside in a HUBZone for at least 6 months
Some of the information required to apply for HUBZone Certification includes:
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Ownership information
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Recent business financials
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Tax returns
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Bonding information
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Employee information
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Two months of payroll information as of the application date
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General business information
The top ten categories for HUBZone contracts are:
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Commercial and Institutional Building Construction
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Heavy Engineering and Civil Engineering Construction
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Computer Related Services
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Highway, Street, and Bridge Construction
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Facilities Support Services
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Engineering Services
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Security Guards and Patrol Services
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Research and Development
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Consulting Services
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Men’s and Boy’s Apparel
What does HUBZone mean?
HUBZone stands for Historically Underutilized Business Zone and is an area designated by the federal government for set aside contracts. These contracts are meant to boost business revenue and employment in the HUBZone area.
How do I know if my company is in a HUBZone?
Click here and enter your address to see if your company is in a HUBZone or look for a HUBZone to start or relocate your business.
What are set aside contracts?
Set aside contracts are Federal requests for proposals or RFPs that can only be awarded to a firm that meets the designated certification qualification. Having the certification greatly increases your chances of success since you will only compete with other qualified certified firms. HUBZone firms also receive a 10% price evaluation preference with the federal government.
How do I qualify for the HUBZone?
There are many requirements, see the application guide below, but the most important are that the business main office is located in a HUBZone and that 35% of your qualifying employees live in a HUBZone. Employees don’t have to work in the same HUBZone as the main office, but they must live in a HUBZone designated area. Employees must work a minimum of 40 hours per month, have proof of HUBZone home address for at least 6 months, and be on the payroll. Two months of payroll are required.
How many employees do I need to qualify?
There is no employee maximum or minimum. A one-person Company can apply and be successful.
How do I apply for the HUBZone?
The application has two parts: one part is the electronic application that is timed, and another part that is the portal for uploading documents. Click here for details.
How long does it take to get certified as a HUBZone company?
It depends on how busy the SBA is at the time of submission, but in general, it takes about 4 to 6 months.
The Veteran-Owned Small Business (VOSB) and the Service Disabled Veteran Owned Small Business (SDVOSB) verifications have similar requirements except the SDVOSB applicant must have a service-connected disability that has been determined by the Department of Veteran’s Affairs (VA) or the Department of Defense (DOD).
The VOSB and the SDVOSB are both specifically designed to assist veterans with their small businesses by establishing sole-source contracts and set aside opportunities that are issued by the VA. The program provides the VA with the authority to set acquisitions aside for exclusive competition among veteran-owned small business concerns. Veteran-Owned Businesses can apply for government contracts as well as take part in prime contractor partnerships with a 10% pricing preference.
Eligibility is based on the following criteria:
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The Veteran owned business must meet the SBA’s criteria as a small business under the North American Industry Classification System (NAICS) code assignment
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The veteran must unconditionally own 51% of their business
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The veteran must control the management and daily operations of the business
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The veteran must hold the highest managerial position in the business
With regard to the SDVOSB, conditions for award include providing the Department of Defense Form 214 which is issued upon a military service member’s retirement, separation, or discharge from active duty, as well as a letter from the US Department of Veteran’s Affairs stating that you are indeed service-disabled, or discharge papers from the branch of service that you were in stating that you have a service-connected disability.
The National Minority Supplier Development Council is the prime certifying body for small businesses that wish to seek a Minority Business Enterprise (MBE) certification.
They are endorsed by the SBA and provide a direct link between corporate America and minority-owned businesses. The minority business enterprise certification was created to bring more opportunities for minority businesses of all kinds.
The application process is lengthy, but the rewards can be great. Prerequisites include a site visit which does not preclude a home office.
Some of the requirements include:
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The History of the Business
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Certificate of Incorporation
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Articles of Incorporation
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Stock Certificates and Stock Ledger
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Minutes to Board of Director’s meetings as well as Shareholder’s meetings
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Bylaws (executed and attested) and Amendments (if applicable)
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All agreement(s) pertaining to ownership, operation, and control of the business
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Proof of U.S. Citizenship (birth certificates or U.S. passports only) for all Principals
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Corporate Bank Resolution Agreement(s) to include Bank Signature Card(s)
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Business Lease Agreement(s) (and Security Deeds if home-based)
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Proof of general liability insurance and in some cases bonding
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Copies of the firm’s cancelled checks
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Business License
Financial information is critical in validating a company’s business legitimacy and ownership and is kept confidential. Depending on your business structure, you must provide:
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If a Corporation: Income Statement, Balance Sheet, and the Corporation’s income tax return (1120, 11205) including all schedules for one year preceding the year of application
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If a Sole Proprietorship: Income Statement, Balance Sheet, and the Proprietor’s IRS tax form (1040, schedule C)
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If a Partnership: Income Statement, Balance Sheet, and the Partnership’s income tax return (1065)
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If a Limited Liability Corporation (LLC): Income Statement and Balance Sheet
What is an MBE certification?
An MBE is a minority business enterprise. This certification verifies that a company is owned and directed by an American citizen with a minority ethnicity. The recognized ethnicities are African, Asian, Native American, and Hispanic. To qualify you must prove that you are at least 25% of one of these ethnicities and have a business based in the US. To qualify as a native American, you must have a tribal card. This certification is open to any minority-owned business of any size; you do not have to be a small business.
How do I qualify as a minority?
To apply for the certification, among other items, you must submit your birth certificate or passport that verifies your minority ethnicity. If these documents do not verify your ethnicity, then you must submit one of your parents’ or grandparents’ birth or death certificates that show their ethnicity. As a last resort, an affidavit of ethnicity is sometimes accepted.
What does MBE mean?
Minority Business Enterprise
How do I get certified as an MBE?
The National Minority Supplier Development Council (NMSDC) administers the MBE certification application. It is a comprehensive application that requires detailed documents and questions about the company and the minority individual who runs it.
What is the benefit of being an MBE?
The federal government incentivizes large corporations with supplier diversity departments to add certified vendors with tax breaks. In addition, it gives you a preference with state and local governments too.
What is the difference between an MBE and an 8(a)?
The 8(a) is a federal business development program for companies that are owned and operated by minority individuals. It is a 9-year program and gives the recipient access to sole-source contracts and an SBA advisor. However, it is a much more difficult program to get into. The 8(a) has strict standards for size, net worth, and many other requirements. The MBE is the nationally recognized minority business designation and is open to any minority-owned business of any size
How do you qualify for an MBE?
You must prove your ethnicity with your birth certificate or related documents, submit documents that verify ownership and corporate structure, answer extensive questions about the operation of your company along with bank and client references.
What is a WMBE?
These designations are usually administered by states to cover the woman and minority certifications that some states require to do business with them. However, many states accept the National Minority Supplier Development Council MBE in lieu of having to apply for theirs.
WBE stands for Women’s Business Enterprise and is a powerful marketing tool for female business owners. To qualify for a WBE Certification, the business must be at least 51% owned and controlled by one or more women, and primarily managed by one or more women who are U.S. citizens. In general, the woman business owner should be the highest paid, and unlike the WOSB which is for small businesses, any female-owned business of any size can become WBE designated, provided they meet all the requirements.
The SBA recognizes the Women’s Business Enterprise National Council or WBENC as a national certifying body for this important designation. The WEBENC WBE certification opens doors to you as a supplier and offers many benefits to women business owners. These include the WEBENC national association with many training, networking, and assistance opportunities for women business owners to learn government marketing and improve their management skills to grow their businesses. The WBE certification is mainly for woman-owned firms that want to do business with larger companies that have a supplier diversity department.
The process is complex and requires submissions to be provided in a very specific manner. Let LG Professional Contracts experienced certification experts help you attain the valuable WBE or WBENC certification in the shortest amount of time with the least amount of frustration.
What is the difference between a WBE certification and a WOSB certification?
The WBE is the Women’s Business Enterprise certification that is administered by the Women’s Business Enterprise National Council or WBENC, the US Women’s Chamber of Commerce, and most States. To qualify, the business must be owned and run by a woman who has industry experience. The WBE certification is favored by large businesses with a supplier diversity program. The WOSB is the Woman Owned Small Business Certification administered by the SBA and is favored by state, local, and the federal government. The differences between the two certifications are the certifying bodies and what types of clients are targeted by each certification, but they both designate your business as a woman-owned small business. A WBE can be any sized business, but the WOSB must meet the SBA standards for a small business.
How do you qualify as a woman-owned business?
To qualify as a woman-owned business the business must be owned at least 51% and directed by a woman (or women) with significant industry experience. And in general, the woman business owner should be the highest-paid.
What size business qualifies as a small business?
In general, the answer varies by industry, but a small business is one that has fewer than 1,500 employees and a maximum of $38.5 million in average annual receipts, according to the SBA.
What is a WOSB?
A Woman-Owned Small Business (WOSB) is a business designation administered by the SBA and the US Women’s Chamber of Commerce. Economically disadvantaged women business owners can also apply for the EDWOSB. This certification has a rigorous application and is favored by the federal government and some States for contracting and is only for small businesses.
Who qualifies as economically disadvantaged?
An economically disadvantaged woman is one who has a net worth of less than $750,000 according to the SBA.
How long does it take to get WBE or WOSB certified?
It depends on which certifying body you apply to, but it generally takes about 60 days.
Which certification is best for my company?
This depends mainly on your target clients. Do you want to work with larger companies that have supplier diversity programs like Target? In that case, the WBE is the right choice. Do you want to work with the Federal Government? Then the WOSB or EDWOSB is the right certification. Do you want to work with the state or local government where your company is located? In this case, you should check with your state’s website to see which certification is favored. Contact Cayenne Consulting for assistance in determining which certifications are best for your business.
Do female-owned businesses get tax breaks?
In general, no, but the companies that hire certified woman-owned firms can get tax breaks.