8(a) Program Participation Down 34% Since 2010

Participation in the SBA’s 8(a) Program has declined from about 7,000 firms in 2010 to only around 4,500 today–a sharp drop of approximately 34% in only six years.

These startling numbers come from a recent SBA Office of Inspector General report, which focuses on whether the SBA properly documented the reasons for admitting certain 8(a) participants.  While that matter is interesting in its own right, the most revealing part of the SBA OIG report is the rapid decline in 8(a) Program participation, and the SBA’s plans to reverse it.

The SBA OIG report states that “[s]ince 2010, there has been a steady decline in the number of firms participating in the 8(a) Program from about 7,000 in 2010 to about 4,600 in 2015.”  As of January 2016, the numbers had dropped even more, to “approximately 4,495 participants.”

One potential reason for the low numbers: the administrative burdens of getting certified.  The SBA’s letter responding to the SBA OIG Report states:

Though over 2,000 applicants apply each year, the SBA historically rejects most applications as incomplete and missing documentation.  Typically, only 25% of the applicants or approximately 500-600 applicants per year are ultimately certified to participate in the 8(a) BD Program by the Associate Administrator of the Office of 8(a) Business Development.

In an effort to increase the number of certified 8(a) Program participants, the SBA has “developed an aggressive growth plan to increase the number of participants in the 8(a) Program for the coming years by piloting a streamlined application process and shifting responsibilities for continuing eligibility.”  SBA’s goal is “to increase the number of approved applications over the previous year by 5 percent for both FYs 2016 and 2017.”  As part of this initiative, SBA plans to “provide responsive customer service for 8(a) applicants” and “reduce administrative paperwork burdens on applicants . . ..”

The sharp decline in 8(a) participation seems stunning at first blush–but it really should come as no surprise.  For several years, it has been very difficult for many companies to navigate the administrative aspects of becoming 8(a) certified.  I’ve heard more than my share of complaints about unusual delays, difficult-to-reach evaluators, and so on–all of which can cause well-qualified companies to give up on becoming 8(a) certified.

The SBA is right to emphasize customer service in an effort to reverse the downward trend.  The SBA needs to continue serving as an effective gatekeeper to keep ineligible companies out of the 8(a) Program, but should make it as easy as possible for qualified companies to become admitted.  Better interaction with applicants should go a long way toward meeting those 5 percent growth goals the SBA has established.

Watch our YouTube video on this topic here.