by: Tim Knox

Q: A friend told me that as a woman of Native American descent I
might be eligible for a special SBA program that will help me start
a small business. He said I could compete for government contracts
through this program. Can you tell me what SBA program he's
referring to?
-- Clara P.

A: Your friend is probably referring to the Small Business
Administration's (SBA) 8(a) Business Development (BD) Program. The
8(a) Program (named after the section of the Small Business Act from
which it comes) is an SBA program created to help small
disadvantaged businesses better compete in the U.S. marketplace and
within the arena of government procurement. The SBA provides
business development, technical assistance and other services to the
small businesses that are accepted into the 8(a) program.

The 8(a) program is reserved for what the SBA calls "socially
disadvantaged individuals." Socially disadvantaged individuals are
defined as those who have been subjected to racial or ethnic
prejudice or cultural bias because of their membership in a
disadvantaged group.

The SBA has designated the following groups as socially
disadvantaged:

· Black Americans · Hispanic Americans · Native Americans (Native
American Indians, Eskimos, Aleuts, and Native Hawaiians) · Certain
Asian Pacific Americans · Other individuals who can prove that they
meet the SBA's criteria to be considered socially disadvantaged

One point where your friend is incorrect is that the 8(a) program is
for new companies. The 8(a) program is primarily for companies that
have been in business for a minimum of two years, though that rule
may be waived if your company is able to meet some pretty strict
management, financial, and performance criteria.

Obtaining 8(a) status is no guarantee that a company will be
successful in obtaining government or other contracts, but it
certainly doesn't hurt. The Small Business Act mandates that all
small businesses have the opportunity to provide goods and services
to the U.S. government. To help ensure that mandate, the SBA
negotiates annual procurement preference goals with every Federal
agency and reviews each agency's results to make sure the goals were
met.

The statutory goals are: 23 percent of all prime contracts go to
small businesses; 5 percent of prime and subcontracts for small
disadvantaged businesses; 5 percent of prime and subcontracts for
women-owned small businesses; 3 percent of prime contracts for
HUBZone small businesses; and 3 percent of prime and subcontracts
for service-disabled veteran-owned small businesses.

A HUBZone (Historically Underutilized Business Zone) is a designated
area within urban and rural communities that has been given
preferential contract award consideration in an effort to stimulate
economic development. A company may qualify for HUBZone status if it
is owned or controlled by one or more U.S. citizens, has at least 35
percent of employees who live within the designated zone, and has a
principal office located there. HUBZones are a whole 'nother topic
that we can discuss at another time. Suffice it to say that a
company that obtains both 8(a) and HUBZone status may be entitled to
double dip in the government procurement trough, that's why you
often find a number of 8(a) companies specifically moving into
HUBZone areas to take advantage of the perks both programs offer.

The U.S. government purchases billions of dollars in goods and
services every year, everything from staples to those wonderfully
expensive toilet seats. Obtaining 8(a) status allows small
businesses to compete for a portion of that business.

The basic requirements for applying for 8(a) status are your company
must be a small business as defined by the SBA, must be owned and
controlled by one or more socially and economically disadvantaged
individuals who are U.S. citizens, and must show a potential for
success. The SBA defines a small business as "one that is
independently owned and operated, is organized for profit, and is
not dominant in its field."

As expected, the 8(a) program has its fans and its detractors. It's
fans are those companies that obtain 8(a) status and thereby get
preferential treatment when competing for government procurement
contracts.

The program's detractors are typically those companies that fail to
obtain 8(a) status or that do not meet the definition of socially
disadvantaged, i.e. businesses owned my white American males (that's
a can of worms we won't open this week).

You can learn more at the SBA's website (sba.gov) or by calling your
local SBA office.

Here's to your success!

About the author:
Tim serves as the president and CEO of three successful technology
companies and is the founder of DropshipWholesale.net, an online
organization dedicated to the success of online and eBay
entrepreneurs
http://www.prosperityandprofits.comhttp://www.dropshipwholesale.nethttp://www.30dayblueprint.com