Are you wondering if having a family member who is or has been 8(a) certified can affect your ability to become 8(a) certified? Does your business qualify for this program? Are there any additional requirements that need to be met for your company to be eligible for the 8(a) certification? These are all important questions to consider when applying for 8(a) certification.
In this blog post, we will discuss the SBA policy and requirements for obtaining 8(a) certification if you have a family member who has been 8(a) certified. So, let’s dive into the details of this program and answer the question: Can you get 8(a) certified if you have a family member who is or has been 8(a) certified?
SBA’s Previous Rule for 8(a) Certificate And Familial Relationships
To ensure that the 8(a) Program remains fair and equitable for all applicants, the SBA enforces strict rules about familial ties to existing 8(a) companies. These rules have the following main points
Key Points of the Policy
Unfortunately, if you already have an immediate family member or were previously involved in the 8(a) Program, you will not be eligible for certification. The following are some factors that could disqualify your eligibility:
- If you had an ownership stake in a family member’s business while they were certified through the SBA 8(a) Program
- When your closest relative was accepted into the Small Business Administration’s 8(a) Program, you were a critical director, officer, or partner of their business.
- If your business has engaged in any financial transaction with the members of your immediate family
- If you or any of your immediate family own a business in the same four-digit “Industry Group” as yours, according to the NAICS Manual
- If your close family member’s business is no longer 8(a) Certified, and you can demonstrate that there has been no collaboration between the two of you for at least three consecutive years, then you may be eligible to achieve 8(a) Certification.
The Conditions in Which a Policy Waiver May Be Granted
The American Association/Business Division (AA/BD) may grant a waiver to this policy if
- The two entities have no connections, such as ownership, control, or contractual relationships. This can only occur when the individual applying for the second concern has had management and technical experience in that industry.
However, there is an implicit leaning towards declining any waivers requested by organizations operating within similar lines of business as current or previous 8(a) concerns – consequently, compelling proof must be provided demonstrating that no connection exists between both firms.
What Happens When the Waiver Has Been Granted?
If the AA/BD grants a waiver, then SBA will analyze whether the firm is still functioning independently from another 8(a) concern that has an immediate family member.
Suppose it’s evident that there are undisclosed connections between both companies or those created after receiving permission for the waiver. In that case, SBA may initiate proceedings to exclude them from further participation in the 8(a) BD program.
The Small Business Administration may initiate the termination of an 8(a) concern if any immediate family member begins to operate in a similar line of business that was not present at the time when their waiver approval was granted.
SBA’s Updated Rule for 8(a) Certificate And Familial Relationships
The Small Business Administration (SBA) now acknowledges that the “no connection” policy went too far. In its accompanying commentary to the new rule, SBA states that. The Small Business Administration (SBA) believes that, in most cases, it is reasonable for a brother who owns a general construction firm to employ his sibling’s specialty trade contractor on contracted jobs. After all, having no connections at all would be too extreme! Therefore, if two brothers own distinct businesses such as these two types of construction companies, there should not be any issue with their arrangement.
Positives of the New Policy
Starting when the new rule takes effect, 8(a) applicants and participants will no longer be obligated to prove a lack of relationship with existing or previous 8(a) businesses managed by their immediate family. Instead, SBA is inclined to evaluate if there are similarities between them, such as joint ownership or shared facilities.
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