Writing a social disadvantage narrative for application to SBA’s 8(a) Business Development Program can be tricky. While SBA’s regulations can guide your pen, they are 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.”
If you are not a member of a designated group that SBA has deemed socially disadvantaged under section 124.103(b), then you will have to include a social disadvantage narrative with your 8(a) application. This narrative must prove to SBA that you are socially disadvantaged by 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 two things:
- the negative impact of the experience on your entry into or advancement in the business world; and
- 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).
This is crucial, as SBA has denied many applications that failed to demonstrate experiences meeting both 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.
Second, testimonies of 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.
Third, long term impact is key (i.e. don’t tell SBA how you overcame the discrimination or negative treatment, focus instead on how it became a hurdle).
And fourth, it is important 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 show SBA why those were not cause of your social disadvantage.
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