In late 2016, the SBA rolled out a fantastic tool to help small business grow in the marketplace.
Here are five things you should know about the SBA All Small Mentor-Protégé Program:
- It’s a business development program.
I’m often asked by small business owners, What is the new mentor-protégé program? My answer is simple: it’s a business development program aimed at increasing small business capabilities. Under the All Small Mentor-Protege Program, a mentor provides its protégé with various types of business development assistance.
- What type of assistance can be given?
The All Small Mentor-Protege Program is designed to help protégés improve their ability to compete for government contracts. As a result, mentors can provide virtually any type of assistance that would help protégés do so. This assistance might qualify as technical or management assistance, financial assistance (including taking a minority equity stake in the protégé to help raise capital), subcontracts or subcontracting assistance, trade education, or any other general or administrative assistance. Mentors and protégés can also—but don’t have to—form a joint venture relationship to pursue one or more contracts.
- Who’s eligible to participate?
The Program’s rules are broad enough that really any business can participate. To qualify as a protégé, a company simply has to be a small business under its primary NAICS code or under a secondary NAICS code under which it is seeking business development assistance. (To qualify as a protege in a secondary code, however, the company must have done business in that code). Any business (large or small) can act as a mentor, so long as it has the capabilities to offer the pledged assistance and is of good character.
- The benefits of participation.
For a protégé, the benefits to participation are obvious: so long as the mentor lives up to its end of the bargain, the protege should gain increased capabilities and become more competitive in the federal marketplace. A protégé, moreover, will not be considered to be affiliated with its mentor simply because of the assistance provided by the mentor (but a word of caution: affiliation might still be found for other reasons).
But what’s in it for a mentor? Aside from the good karma promised by helping develop a small business, a large business mentor may also have increased access to federal contracts. If a mentor and protégé choose to form a joint venture to pursue a federal contract, the joint venture will qualify as a small business if the protégé alone qualifies as a small business. This is a great benefit—for joint ventures between companies that aren’t in a mentor-protégé relationship, both companies would separately have to qualify as small. By entering into a mentor-protégé joint venture relationship, a large business will increase its access to small business contracts.
The affiliation exception can also be appealing to mentors, as it may allow a mentor to have a closer working relationship with a small business than might otherwise be advisable under the SBA’s affiliation rules.
- How can your business apply?
To form an All-Small Mentor-Protégé relationship, the parties must complete a written application that details the type of assistance needed by the protégé and explains (complete with timetables and progress benchmarks) how the mentor will provide that assistance. The application must be approved by the SBA. The benefits of the All Small Mentor-Protege Program don’t kick in until the SBA’s approval and only last while the mentor-protege agreement is in effect. Additional details about the application process can be found on the SBA’s All Small Mentor-Protege website.
Though still in its infancy, the All Small Mentor-Protégé Program has already been a tremendous benefit to its participants. If you’d like to learn more, or if you want help applying, please give me a call.