There is normally a two year requirement in order to be certified to apply for the SBA 8a Certification. That is two years of income tax returns and business receipts which is evidence of business success. However, given the current economy, many businesses haven’t been around for two years as they have been started by applicants who lost their jobs during the recent economic downturn. Those applicants are eligible to apply for a special SBA 8(a) Two Year Waiver.
What requirements does an applicant have to satisfy?
The SBA carefully reviews all 8a Applications, especially waiver requests and looks for the following:
(1) Business Plan: Applicants have to show the SBA a business plan and business goals. How does the business plan to grow? Not all growth is linear. A business can have little or no sales in the first quarter but have a plan of how to increase sales over the next few quarters. What market research is being used? For instance, Constant Contact and SalesForce.com have great databases to prospect new customers. Are applicants using social media like FaceBook and Twitter being used to reach new customers around the country and world? Are applicants using viral videos on YouTube to spread their message?
(2) Team Experience: Who is on the management team? What business experience do they have? The SBA wants to see that there is enough experience for the team to succeed. Ownership experience is not necessary. Management experience is required.
(3) Contract History: An applicant has to have successfully completed a contract in the business they are applying in. The contract can be from a private or public source but has to be $10,000 or more.
(4) Financing: The applicant has to have 90 days of working capital to finance the business. Bank records have to be provided. The SBA also reviews income tax returns.
(5) Access to People and Equipment: Businesses are not expected to have all the people and equipment they need to complete the job at the time of the awarding of the contract. However, they need to show that they can find those that those resources can be obtained within 30 to 60 days. Use of temporary staffing companies like Robert Half, Interim, and Manpower have qualified people ready to work once the contract is awarded.
Bottom Line: Building new businesses are never easy. Small businesses are the engine of the American economy. The SBA Two Year Waiver is one way to help new businesses help their dreams become a reality.
