8(a) Social Disadvantage Narratives: What SBA is Looking For–Now, From ALL Individually-Owned 8(a) Applicants and Participants

Writing a social disadvantage narrative for application to SBA’s 8(a) Business Development Program has always been an arduous undertaking–to say the least. And up until a recent Federal District Court decision (which we blogged on here), only a small portion of 8(a) Program applicants had to submit this time-consuming, highly personal, difficult task. But now (as discussed in the above-linked blog and in this blog on SBA’s recent actions in response to the decision), this requirement is being expanded to all individual applicants that haven’t already provided a social disadvantage narrative. You can read much more about SBA’s implementation of this here. But essentially, you will need to write a social disadvantage narrative if you are an individually-owned1 8(a) applicant or program participant who is trying to get into the 8(a) Program or already in the 8(a) Program–even if you were planning to or already had relied on the rebuttable presumption of social disadvantage (which SBA can no longer use).

Fortunately, we have been drafting these narratives for a long time now, meticulously studying and utilizing: (i) SBA’s rules, policies, and guidance on social disadvantage narratives (recent guidance can be found here); (ii) SBA’s feedback on individual narratives; and (iii) SBA’s Office of Hearings and Appeals (OHA) decisions covering the SBA’s initial appealed decisions on applicants’ social disadvantage eligibility–as well as OHA’s final decisions on the appeals. So, while SBA’s current regulations and guidance can guide your pen, they are certainly not the only source of helpful information out there. Let’s take a look at some SBA guidance and recommendations based on SBA’s actual decisions that may increase your chances for success.

To orient yourself, SBA’s 8(a) Business Development Regulations are found in 13 C.F.R. Part 124, Subpart A, which includes both the general 8(a) application requirements and the social disadvantage rules.

According to SBA, individuals are socially disadvantaged if they “have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities[,]” and this social disadvantage stems “from circumstances beyond their control.” Again, we are not sure exactly how SBA’s new social disadvantage rules are going to look. But we do know the prior “presumption of social disadvantage” based on membership in a designated group (currently under section 124.103(b)) is gone. So, now, every individually-owned 8(a) applicant and participant will need to draft and submit a social disadvantage narrative to get or keep their 8(a) Program certification. That said, let’s dig right in to how to draft your narrative.

Drafting a Social Disadvantage Narrative

This narrative must prove to SBA that you are socially disadvantaged based on a preponderance of the evidence and should include corroborating evidence wherever possible. SBA’s regulation don’t define preponderance, but SBA’s Helpful Tips to Apply to the 8(a) Program state that “preponderance is evidence of a quality and quantity which leads the decision maker to objectively conclude that the existence or truth of the facts asserted is more probable than not,” and SBA provides examples of evidence that meets this standard.

According to SBA, there are four elements of establishing social disadvantage:

  • You need at least one objective distinguishing feature (discussed further below);
  • Your social disadvantage must be rooted in treatment experienced in American society;
  • Your social disadvantage must be chronic and substantial, not fleeting or insignificant; and
  • Your social disadvantage must have negatively impacted your entry or advancement in the business world.

An objective distinguishing feature is an identifiable feature that has caused or contributed to your social disadvantage. Generally, this means a characteristic individuals who are not socially disadvantaged don’t have. SBA’s regulations provide examples, such as race, ethnic origin, gender, physical handicap, and long-term residence in environment isolated from mainstream American society.

The second and third elements of social disadvantage are pretty self explanatory. The negative treatment you’ve received must’ve been in the United States, and it must have been long-term and significant.

To demonstrate the negative impact required under the fourth element, you must demonstrate your social disadvantage through experiences of discrimination or negative treatment relating to your education, employment, and/or business history.

But most importantly, for each of these experiences, you must show three things:

  • the details surrounding the event (names, dates, locations, etc.) to the best of your ability;
  • that there was no legitimate alternative ground for the treatment you received (or, if an alternative ground exists, that the treatment was more likely due to your objective distinguishing feature than the alternative ground); and
  • the negative impact of the experience on your entry into or advancement in the business world.

This is crucial, as SBA has denied many applications that failed to demonstrate experiences meeting all three of these factors. And there are some important takeaways from SBA’s decisions denying applications on these bases.

In one decision that we previously blogged on, SBA denied a woman’s application based primarily on her statements that she had become an advocate and mentor to women in the field after overcoming gender-based bias. SBA said, this “apparently is a very successful company, well respected in its field,” and therefore, the applicant did not “prove social disadvantage to entering or advancing in the business world.”

In another decision we discussed, SBA again denied a woman’s application where she alleged gender-based bias, this time because she failed to show that her unequal treatment was due to her gender and not her physical condition (muscular dystrophy).

So what have I learned from these and other SBA decisions regarding social disadvantage?

First, the more specific you can be about the experience, the better. It may help to include facts about the location, the parties involved, etc. A lot of people struggle with this one–and honestly, for good reasons. For one, many of these events are traumatic, memories people don’t want to hang on to. Also, sometimes people are worried about disclosing names of people, companies, etc., given the sensitive subject matter. And both of these are more than understandable. So, here are a few tips to help:

  • If you don’t remember a date, try including a season (i.e., “I remember it was winter, as there was snow on the ground”) a year, what grade you were in (for education events), etc.; and
  • If you don’t remember, never knew, or don’t want to disclose a name, try giving a name to the individual or company and simply disclosing to SBA why (i.e., “I am going to call him Mr. S, because I was never told his name or forgot it”).

NOTE: There is always a chance that SBA inquires for more details if your narrative contains more vague information like this, so it is important to still include as many details as you can remember (i.e., “Mr. S, though I didn’t know his name, was the Principal at the school and was roughly 40 years old, etc.”)

Second, testimonials from others are gold. Even if your corroborating evidence is a statement from your business partner about the way you were treated, it is better than nothing. And in the age of technology, don’t forget to check your past emails, social media, text messages, call logs, etc., for any supporting evidence for the instances discussed in your narrative.

Third, it is absolutely crucial to tie all of your listed experiences directly to your objective distinguishing feature. If there are other potential reasons for the negative treatment you received, you must discuss those–and you must show SBA why those were not the actual reasons for your negative treatment (or–at a minimum–why you have good reason to believe they were not the actual reasons for it).

Fourth, long term impact is key! I have seen far too many narratives returned for revision and/or denied because the applicant failed to show how each instance of social disadvantaged negatively impacted their success–their entry or advancement in the business world. So, make sure you take the time to really explain the various ways each event affected you long-term. Also, don’t tell SBA how you overcame the discrimination or negative treatment; focus instead on how it became an uphill battle that others never had to face, and held you back compared to other–non-socially disadvantaged–people.

Fifth–and finally, avoid generalizations. Try to focus on you–on your story, the social disadvantage you have faced. While there are very real, very widespread historical and current examples of generalized discrimination that many are tempted to discuss in their social disadvantage narrative–that is not what SBA is looking for here (especially in light of the Federal District Court’s decision dismantling presumptions of disadvantage). And while these narratives can get quite extensive, SBA still wants to see them get right to the point, in as few pages as possible (which you can read more about here), while still meeting all requirements and guidance. So, it is discouraged to include anything in your narrative that is not a clear part of the formula we discussed above.

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Is your head spinning yet? Don’t worry, you are not alone. Even many brilliant, successful business owners and other professionals have struggled immensely to draft an acceptable social disadvantage narrative. SBA has historically been tough as nails on these things. Now, with how many narratives SBA is now going to review–and many on very short time frames pending awards, we (probably like you) are anxious to see if the huge influx of narratives and need for prompt answers will have any effect on these rules, guidance, policies, or SBA’s enormously high standard of review. We shall see! But for now, your best bet is to start working on the best narrative you can, right now.

Need assistance with your social disadvantage narrative or other 8(a) or federal contracting matters? Questions about this post? Email us or give us a call at 785-200-8919.

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  1. Note: This requirement does not apply to any entity-owned 8(a) companies (ANCs, NHOs, or other Tribal Nation owned-entities, as their eligibility was never based on social disadvantage to begin with. ↩︎