The Small Business Administration’s 8a Certification Program offers aid to small businesses that are at a social and/or economic disadvantage to allow for fair competition. As part of the Small Business Act, hundreds of new companies have taken advantage each year with a total of 6,333 active 8a-certified businesses in existence since the program began a decade ago. On July 19th, however, a federal judge made a decision that changed how the program works. Find out how it could affect your business.

The SBA 8(a) Program

With the help of the 8a program, small businesses that are disadvantaged are offered access to government contracts they would otherwise be unable to acquire. To determine which businesses qualify as disadvantaged, the SBA defined a rebuttable presumption of social disadvantage, which includes minority groups based on race, ethnicity or cultural background.

The rebuttable presumption of social disadvantage allowed certain businesses owned and operated by members of defined minority groups to qualify by default for the 8a program. They did not have to provide proof of their social or economic disadvantage, as it was viewed as inherent in accordance with the law’s definition of social disadvantage.

The Ultima Case

On July 19, 2023, the Ultima case concluded with a judge in Tennessee issuing a ruling that would change how the 8a program functions. Ultima Services Corporation made a claim that it lost out on contract opportunities and suffered for it because they were not eligible for the 8a program since the company was owned and operated by a white woman.

The court ruled that Ultima’s right to equal protection under the law was being violated by the rebuttable presumption of social disadvantage. Because of this, the court ruled that the SBA and the Department of Agriculture should not continue to use the rebuttable presumption standard when determining who is eligible for the 8a program.

The Future of 8a

With this court ruling, the way the 8a program is administered is going to change. Instead of the system presuming a social disadvantage, businesses will now have to demonstrate their social or economic advantage in order to qualify. Specifically, businesses will have to provide what’s known as a preponderance of evidence based on specific criteria.

Businesses should expect a greater amount of effort required when it comes to applying for the 8a program. Without the presumption of social disadvantage, you will need to craft your application carefully rather than simply checking some boxes. It’s also important to remember that this may not be the end of challenges to the 8a program.

Taking Advantage

If you are already participating in the 8a program, you shouldn’t have to worry about any changes despite this ruling. You won’t have to present a preponderance of evidence if you are already qualified. That could change, however, so it is best to be prepared. If you haven’t already applied for the 8a program, it may be best to do it sooner rather than later given the very real possibility that even more restrictions will develop down the line.