Frequently Asked Questions
Am I a small business?
You may take it for granted that your company is a "small business." The distinction is important if you wish to register for government contracting as a small business. Once you register as a government contractor, you must adhere to industry size standards established by the U.S. Small Business Administration.
The SBA, for most industries, defines a "small business" either in terms of the average number of employees over the past 12 months, or average annual receipts over the past three years. In addition, SBA defines a U.S. small business as a concern that:
- Is organized for profit;
- Has a place of business in the US;
- Operates primarily within the U.S. or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor;
- Is independently owned and operated; and
- Is not dominant in its field on a national basis.
The business may be a sole proprietorship, partnership, corporation, or any other legal form. In determining what constitutes a small business, the definition will vary to reflect industry differences, such as size standards.
What is the 8(a) Business Development Program?
Generally, to be approved into the 8(a) Business Development program and become certified the business must meet these eligibility requirements:
- The business must be majority-owned (51 percent or more) by an individual(s).
- The individual(s) must be an American citizen, by birth or naturalization.
- The business must be majority-owned (51 percent or more) and controlled/managed by socially and economically disadvantaged individual(s).
- The individual(s) controlling and managing the firm on a full-time basis must meet the SBA requirement for disadvantage, by proving both social disadvantage and economic disadvantage.
- The business must be a small business.
- The business must demonstrate potential for success.
- The principals must show good character.
- Separate eligibility requirements exist for a business that is owned by American Indians,
Native Alaskans, Native Hawaiians or Certified Development Companies.
What is the SBA HUBZone Program?
The Historically Underutilized Business Zones (HUBZone) program was enacted into law as part of the Small Business Reauthorization Act of 1997 . The program falls under the auspices of the U.S. Small Business Administration. The program encourages economic development in historically underutilized business zones - "HUBZones" - through the establishment of preferences.
SBA's HUBZone program is in line with the efforts of both the Administration and Congress to promote economic development and employment growth in distressed areas by providing access to more federal contracting opportunities.
How the HUBZone Program Works
The SBA regulates and implements the HUBZone program. SBA does the following:
- Determines which businesses are eligible to receive HUBZone contracts
- Maintains a listing of qualified HUBZone small businesses that federal agencies can use to locate vendors
- Adjudicates protests of eligibility to receive HUBZone contracts
- Reports to the Congress on the program's impact on employment and investment in HUBZone
Benefits of the HUBZone Program
The program’s benefits for HUBZone-certified companies include:
- Competitive and sole source contracting
- 10% price evaluation preference in full and open contract competitions, as well as subcontracting opportunities.
The federal government has a goal of awarding 3% of all dollars for federal prime contracts to HUBZone-certified small business concerns.
Eligibility for the HUBZone
To qualify for the program, a business (except tribally-owned concerns) must meet the following criteria:
- It must be a small business by SBA standards
- It must be owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, an agricultural cooperative, or an Indian tribe
- Its principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act
- At least 35% of its employees must reside in a HUBZone.
What is a Women Owned Small Business or WBE?
The regulations vary slightly based on the level of certification. You have local, state and federal certification options. All certifications are consistent that the business must be 51% managed, owned and controlled by one or more women. Refer to the certifying entity for eligibility requirements and application instruction.
What is a Minority Owned Small Business or MBE?
The regulations vary slightly based on the level of certification. You have local and state certification options. All certifications are consistent that the business must be 51% managed, owned and controlled by one or more individuals presumed to be socially disadvantaged. The current, presumed groups are: Black Americans
Hispanic Americans, Native Americans, Asian Pacific Americans, Subcontinent Asian American. Refer to the certifying entity for eligibility requirements and application instruction.
Is there a contracting goal for Veteran Owned business?
The need to step up and support, not only our veteran population but our veteran business population is loud & clear. Local, state and federal agencies are now certifying veteran owned businesses for potential contract set asides. As in all other certifications, the business must be 51% managed, owned and controlled by one or more veterans. Opportunity exists for veteran owned business through many local & state agencies but federal wide the goal is in place for Service Disabled Veteran Owned businesses only. The US Veterans Administration does have the VETS First Contracting Program that is open to Veteran Owned Small and Service Disabled Veteran owned small business.
The Veterans Entrepreneurship and Small Business Development Act of 1999 (Public Law 106-50 ) established an annual government-wide goal of not less than 3% of the total value of all prime contract and subcontract awards for participation by small business concerns owned and controlled by service-disabled veterans.
On December 16, 2003, the Veterans Benefits Act of 2003 (Public Law 108-183 ) was passed by Congress. Section 308 of the Act (Public Law 108-183) established a procurement program for Service-Disabled Veteran-Owned Small Business Concerns (SDVOSBC). This procurement program provides that federal contracting officers may restrict competition to SDVOSBCs and award a sole source or set-aside contract where certain criteria are met.
The Small Business Administration has issued an interim final rule, establishing a Service-Disabled Veteran-Owned Small Business Concern Program. This program establishes the criteria to be used in federal contracting to determine service-disabled veteran status; business ownership and control requirements; guidelines for establishing sole source and set-aside procurement opportunities; and protest and appeal procedures for SDVOSBC procurements.
Center for Entrepreneurship
Illinois Procurement Technical Assistance Center
2525 Cabot Drive, Suite 201
Lisle, IL 60532
Rita Haake, Program Manager
Phone: (630) 942-2184
Fax: (630) 505-4931
Hours of Operation
Monday to Friday: 8:30 a.m. to 5 p.m.
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