Contents
Introduction
The SBA’s 8(a) Business Development Program is a long-term program that provides training and resources to entrepreneurs from socially and economically disadvantaged backgrounds. The goal of this program is to help these businesses compete more effectively in the broader U.S. economy and to ensure more equitable access to contracting opportunities in the federal marketplace.
In order to qualify, a small business must be 51% owned and controlled by socially and economically disadvantaged individuals. Prior to 2023, businesses owned by Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans were automatically considered to be at a social disadvantage. However, on July 19, 2023, the U.S. District Court for the Eastern District of Tennessee issued a ruling barring the SBA from using the “presumption of social disadvantage” to administer the 8(a) Program.
Following this ruling, the Department of Justice (DOJ) has provided new guidance regarding the court’s order, requiring all new and existing SBA 8(a) participants to reestablish eligibility by completing a “social disadvantage narrative.”
What does this new requirement entail?
New applicants or existing business owners looking to prove social and economic disadvantage can do so through one of two options: by writing a narrative or by completing a fillable questionnaire. For either option, applicants must demonstrate that they have been subjected to chronic racial, ethnic, or cultural bias within American society solely due to their identities as members of a minority group. This discrimination must have negatively impacted entry or advancement in the business world.
A narrative of at least three pages is recommended for those who choose to write it. Those who choose to complete the questionnaire can input a maximum of 1,000 characters per field.
Specific requirements
The SBA requires business owners to include the following:
- Identity: What is the basis of social disadvantage? This can include one or more identities or characteristics, including race, religion, ethnic origin, gender, sexual orientation, identifiable disability, isolation from American society, and others.
- Incidents: Applicants must describe two incidents of discrimination to establish both significant and chronic social disadvantage. These experiences should be related to education, employment, and/or business history.
- Details: For each incident, applicants must include descriptions of the event in the following order:
- When did the discriminatory conduct occur? Exact dates are preferred but not required, and events can be cited from any time period throughout the applicant’s life.
- Where did the discrimination occur? The incident must have taken place in American society.
- Who committed the discriminatory action? This may be an individual, a group, or an institution.
- What occurred? Describe the discriminatory conduct.
- Why did the discrimination occur? Present facts that indicate this action was motivated by bias or discrimination.
- How did this incident impact your entry or advancement in the business world? Offensive comments or conduct, while reprehensible, may not support a claim of social disadvantage if a negative impact on the business cannot be established.
For more information, the SBA has compiled a detailed guide for demonstrating social disadvantage.
Once submitted, the narratives will be reviewed by the SBA alongside other application requirements for approval and admission into the 8(a) program. Business owners are required to submit these narratives only once — after initial evidence of social disadvantage has been established, the business is considered qualified for the duration of the program.
Need help?
Cayenne Consulting is here to take the guesswork out of the SBA 8(a) application process — including navigating the new narrative requirement. Let our experts help you get it done quickly, simply, and correctly, so you can focus on your business. Learn more about our Business Certification Services.