Last week, Nicole Pottroff went through the basics of eligibility for participation in the SBA’s Women-Owned Small Business (“WOSB”) Federal Contracting Program. Today, I’ll walk you through the additional eligibility requirements for participation in SBA’s Economically Disadvantaged Women-Owned Small Business (“EDWOSB”) Program as stated in 13 C.F.R. § 127.200(a). If it has you feeling a little déjà vu, there is good reason for that. Eligibility requirements for the SBA’s WOSB and EDWOSB Programs are very similar, with only a couple small, but very important, differences.
To start off, two of the requirements for eligibility to participate in the EDWOSB program (ownership and control by a woman) are very similar to those of the WOSB program. If you’d like to learn more about those requirements, you can find that in Nicole’s post.
However, where a WOSB must be directly owned and controlled by women, an EDWOSB must be directly owned and controlled by one or more women who are economically disadvantaged. Further, where a WOSB must simply be a small business as defined by SBA rules, an EDWOSB must be a small business for its primary industry classification.
You may be asking, “well, what does economically disadvantaged mean?” In general, economically disadvantaged, at least for the EDWOSB program, means a woman who can demonstrate that her ability to compete in business “has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business.” 13 C.F.R. § 127.203. A woman’s personal net worth must be less that $750,000, exclusive of her ownership interest in the concern, her primary residence, and any funds invested in an IRA or other retirement account
In addition to personal net worth, SBA also looks to a handful of other factors. These include income, spouse’s financial situation, and the fair market value of all assets. A woman’s adjusted gross yearly income averaged over the past three years must not rise above $350,000. Income received from the EDWOSB can be excluded if it can be shown the income was reinvested in the business or used to pay the concern’s taxes. The spouse’s financial situation may be considered to determine a woman’s access to credit and capital. And finally, if a woman’s fair market value of all assets, including the primary residence and value of the concern, exceeds $6 million, SBA will determine her not to be economically disadvantaged.
If those numbers look familiar, they are the same as the economic disadvantage standards for the 8(a) Program.
Additionally, to be able to bid on an EDWOSB set-aside contract, an EDWOSB must operate, under its primary NAICS code, in an industry where women are substantially underrepresented. SBA maintains a list of those NAICS codes, based on a study performed once every five years. Of the 759 industries eligible for WOSB certification, only 113 are eligible for EDWOSB status. For example, many EDWOSB eligible industries are various forms of mining and agriculture. It’s important to note that EDWOSBs may bid on EDWOSB and WOSB set-asides, but WOSBs may only bid on WOSB set-asides.
These are valuable programs created to help women-owned businesses grow, particularly when you account for the federal government’s goal to award 5% of all federal contracting dollars to women-owned small businesses each year.
For additional information on the SBA’s EDWOSB Program, visit the SBA’s website.
Questions about this post, the WOSB Program, or your own eligibility? Email us.