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Small disadvantaged business

Small Disadvantaged Business (SDB)

SDB & 8(a) Business Development Programs

SDBs are small businesses that are at least 51% owned and controlled by a socially and economically disadvantaged individual or individuals. Others may qualify if they show by a preponderance of the evidence that they are disadvantaged.

"Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control."

All individuals must have a net worth of less than $750,000, excluding the equity of the business and primary residence.  Successful applicants must also meet applicable size standards for small businesses in their industry.  The program is intended to help federal agencies achieve the government-wide goal of 5 percent SDB participation in prime contracting.

More information on the SDB Program can be found on the Small Business Administration (SBA) website here. More information on the 8(a) Program can be found on the SBA website here.

8(a) Business Development Businesses

Section 8(a) of the Small Business Act authorizes SBA to contract for goods and services with federal agencies.  SBA then subcontracts actual performance of the work to socially and economically disadvantaged small businesses, which have been certified by SBA as eligible to receive these contracts.  The major advantage of this program is that it allows the government to contract, on a noncompetitive basis, with socially and economically disadvantaged small businesses.  SBA also offers managerial, technical and financial support to participating firms not to exceed $3 million per contract.

Program participation is divided into two stages.  The developmental stage is designed to help 8(a) certified firms overcome their economic disadvantage by providing personalized business assistance in expanding their business and fostering meaningful business relationships.  This period covers years one through four of a firm's participation.  The transitional stage is designed to help program participants become more effective in both the large business and government sector market in dealing with complex deals and to prepare them for post 8(a) program expansion and development.  Formal certification is required by the SBA.  The period occurs from the fifth through the ninth year of the firm's participation in the program.  Businesses must meet eligibility requirements established by the SBA each year, including pre-established 8(a) vs. non 8(a) revenue mixes.

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