The SBA has paused receipt of new 8(a) applications due to the court ruling by the Eastern District of Tennessee. In short, the ruling challenged the “presumptive disadvantage” of minority groups and therefore, their automatic eligibility for the 8(a) program.
The court’s decision ultimately states that the SBA isn’t allowed to use the “rebuttable presumption of social disadvantage” for the 8(a) Program.
If you are Pursuing 8(a)
One component for entry into the 8(a) Program is that majority owner(s) of the company must be “socially disadvantaged.” 13 C.F.R. § 124.103. The minority-owned businesses seeking entry into the 8(a) Program can no longer rely on the benefit of the rebuttable presumption of social disadvantage based on minority status, meaning you must prove that discrimination is chronic and substantial. The SBA states “Potential participants who have already initiated an 8(a) application may continue to work on their applications but may be required to incorporate changes in the future. If that is the case, SBA will give them clear indication of the changes needed.” However, it is recommended that those who have not initiated an application, wait for further guidance to begin.
If you are currently an 8(a) Participant
SBA is requiring all 8(a) participants whose program eligibility is based upon one or more individuals who relied upon the presumption of social disadvantage to establish their individual social disadvantage by completing a social disadvantage narrative https://lnkd.in/esN7exQr . The SBA will submit further guidance to participants directly on August 21, 2023.
If you entered the 8(a) program prior to 2016, chances are a narrative was required as part of your submission. If so, you will not be required to submit another narrative. Further, if you are an ANC, Tribally-Owned, NHO, non-designated individual, you are not impacted by the current ruling.
If you have further questions about these recent changes or the 8(a) program in general, please book a chat here.
