Surviving During Uncertain Times

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SBA Provides 8(a) Program Extension Due to Pandemic

Small Business Administration (SBA)

The United States Small Business Administration (SBA) recently published a rule that, as of January 13, 2021, 8(a) Business Development Program participants can get a one-year program extension due to the challenges of COVID-19.

The aim of the program is to award at least five percent of all federal contracting dollars to small disadvantaged businesses each year. To qualify for the program, businesses must generally be considered a small business, not have previously participated in the program, and be at least 51 percent owned and controlled by U.S. citizens who are socially and economically disadvantaged. These business owners must also have a personal net worth of $750K or less, adjusted gross income of $350k or less, and $6 million or less in assets. They must also demonstrate "good character’ and the potential to perform on contracts.

Businesses eligible for the extension include those who participated in the program between March 13, 2020, and September 9, 2020. Those that were terminated, graduated early, or voluntarily withdrew from the program during this period are not eligible for the extension. Firms that were admitted to the program on or after September 10, 2020 are also ineligible.

Small Business Administration (SBA)2

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There is an automatic one-year extension for businesses who were participating in the program on January 13, 2021, unless they decline that extension in writing. If a business previously suspended its participation in the program voluntarily as a result of the pandemic, the length of the suspension will be added to the program term, and the one-year extension will be added to the end of that extension. Businesses that extend their participation will not be subject to a higher non-8(a) business activity target for the extension period, the SBA says. The same 50 percent business activity target that applies to the ninth program year applies to the extended program term.

Those who do not wish to get an automatic extension need to submit notice of decline in writing or by email.

Businesses that were participating in the 8(a) program as of March 13, 2020, but graduated before January 13, 2021, are eligible for readmittance. Those who wish to be readmitted are encouraged to contact the SBA as soon as possible. Any firm seeking readmittance must be able to certify that they continue to meet applicable eligibility requirements. If a firm is readmitted, the extension date is the same month and day of the original program exit date. If a firm’s program completion date was April 15, 2020, and they were readmitted on January 25, 2021, for example, the new program end date would be April 15, 2021.

The SBA claims that it will readmit a firm to the 8(a) program within five business days of receiving a readmittance request.

In related news, the SBA just announced that it reached a $200 billion milestone in its Economic Injury Disaster Loan program, providing that amount in emergency funding to small businesses, non-profits, and agricultural businesses impacted by the pandemic.