8 A Certification is a United States Small Business Development Program for the small businesses. By obtaining the certification, small businesses can get an access to the federal contracting opportunities. So, getting certified by the SBA is a big thing for small companies that want to grow.
Not every small company can get 8a certified by the Small Business Administration. The firm needs to be eligible for the 8a program. For being eligible, the firm has to be small as per the SBA standards; the owner of the firm should be disadvantaged both socially and economically, he/she should have a good character, the company has to be owned and controlled by the disadvantaged individuals and it should have been in business for a minimum of two years. Only if the company and the entrepreneur have all these qualifications, the SBA is going to approve the 8a application of the firm.
Not every small company can get 8a certified by the Small Business Administration. The firm needs to be eligible for the 8a program. For being eligible, the firm has to be small as per the SBA standards; the owner of the firm should be disadvantaged both socially and economically, he/she should have a good character, the company has to be owned and controlled by the disadvantaged individuals and it should have been in business for a minimum of two years. Only if the company and the entrepreneur have all these qualifications, the SBA is going to approve the 8a application of the firm.
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| 8 A Certification Financial Requirements |
Here in this article we are going to discuss in detail about the financial requirements and limits for obtaining the 8 a certification.
Personal net worth--$250K
The applicant’s personal net worth should not be more than $250K. But do you know what this figure takes into account? It includes all your cash, bonds, stocks, savings and checking accounts, automobiles, RVs, motorcycles and other assets. Though you will need to declare the value of your company, home, 401ks and IRAS on the SBA Form 413 or personal financial statement, they will not be included within the personal net worth limit. The Small Business Administration doesn’t include the value of your home, company or retirement accounts.
Annual salary--$250K
The applicant’s annual salary should not be beyond $250K. The person needs to be the highest paid one in the company. Moreover, his/her salary needs to be reasonable as per the industry standards and should be reasonable in proportion to the annual gross revenue of the firm. The Small Business Administration is going to consider both the salary as well as the amount the entrepreneur draws from the bank account of the company while determining what all is constituted in the ‘total owner compensation.’
Assets market value--$4 million
The individual who is applying for SBA 8a application needs to keep one very important thing in mind. He/she should make sure that the total market value of all the assets that he/she possess is not more than 4 million dollars. The person can ignore the liabilities when considering the total market value of the assets.
The 8a application reviewers generally look for any large or unusual transfers of money between the accounts during the three year period preceding the 8a application submittal. Few things, which the reviewers look for include huge amounts of money presented to relatives or mortgages for homes, which are quickly paid off.
3 year average AGI--$250K
The applicant’s 3 year average AGI or adjusted gross income as shown on the federal tax returns should not be more than $250K.
As far as the financial requirements and limits for 8 a certification is concerned, you should note the above-mentioned four points. They are going to be of great help to you while preparing the SBA 8a application.
