Proposed Rule to Align the 8(a) BD and EDWOSB Program RequirementsPosted: October 2, 2019
In a previous post we discussed the SBA’s proposed rule about the certification processes for women-owned small businesses (WOSBs) and economically disadvantaged women owned small businesses (EDWOSBs).
This proposed rule, posted in May 2019, also looks to make the economic disadvantage requirements for the 8(a) Business Development (BD) program consistent to the economic disadvantage requirements for women-owned firms seeking EDWOSB status. This proposed change would eliminate the distinction in the 8(a) BD program for initial entry into and continued eligibility for the program.
Under the current system, the economic disadvantage criteria for EDWOSBs are the same as the continuing eligibility criteria for the 8(a) BD program, however an entity that applies for EDWOSB and 8(a) status at the same time, might be found to be economically disadvantaged for EDWOSB purposes, but denied the eligibility for the 8(a) BD program based on not being economically disadvantaged.
The new rule looks to make economic disadvantage for the 8(a) BD program consistent to that of an entity seeking to qualify as economically disadvantaged for the EDWOSB program.
The SBA specifically asked for comments (comments were closed on July 15, 2019) on the net worth standard that would be used for the EDWOSB and 8(a) programs. A 2017-18 study that the SBA conducted supported a $375,000 adjusted net worth for initial eligibility, in comparison to the current threshold of $250,000.
The SBA considered applying a $375,000 net worth standard to both the 8(a) BD and EDWOSB programs, however the study did not take into consideration differences in economic disadvantage between businesses applying to the 8(a) BD program and those continuing in the program once admitted.
The new rule proposes to use the $750,000 net worth continuing eligibility standard for all economic disadvantage determinations in the 8(a) BD program.
SBA specifically requested comments on whether the $375,000 net worth standard or the $750,000 net worth standard should be used for the 8(a) BD and EDWOSB programs, as well as how the different standards would affect small business owners participating in the federal marketplace.