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									Presented by the Nevada
District Office of the SBA.
    SBA is Organized for Small Businesses
                          District Offices
        BICs                     69            WBCs
     70 Locations                            80 Locations

   SBDC & SCORE                                 Tribal
    1,400 service                               BICs
      locations                              17 Locations

General SBA Information
   Administrator Hector Barreto and all the
     employees of the U.S. Small Business
      Administration invite you to join in
       celebrating our 50th Anniversary

General SBA Information
    USHCC / LCCN Workshop
    SBA         July 22, 2003   MGM MIRAGE
Seek Out SCORE Advisors

  •Small Business

  •About SCORE

  •SCORE Resources
Small Business & the Nation

     23 million small businesses
     25 % are employers
     75 % of new jobs
     2 million formed in 2002
     53 % home based
     26 %Woman owned
     15 % Minority owned
Small Business & NEVADA

   •Nevada is the Fastest growing State
       97,000 Businesses
       94,000 Small Businesses
       47%     are employers
       9,000   formed each year
       26%     Women
       15%     Minority
Small Business & the Economy

       Successful Small Business Means
                Economic Prosperity
Small Business and Leadership

 Why people own a small business

       Bring a new idea to life
       Be your own boss
       Create financial independence
       Convert a hobby into a profitable
          Average Statistics

       One out of two new
       businesses will be
        here in four years
Why Small Businesses Fail

       Under Capitalized
       Lack of “appropriate” experience
       Poor Planning
       Lack of information (no system)
       Conflict with family goals

            We at SCORE want to
                The Statistics

  “Counselors to America’s Small Business”

 SCORE is a national, nonprofit, volunteer

 SCORE’s mission is to provide small
 business counseling and training to help
 America’s entrepreneurs succeed.

    How can a SCORE business counselor help?
           Business Plans
           Organization of the Startup Process
           Problem-solving
           Practical advice
           Growth strategies
           Sounding board

    SCORE counselors are volunteers.

     Experienced business owners and
     Experts who’ve seen both economic highs
      and lows
     Pros with expertise in professional
About SCORE          Nationwide

    Founded 1965
    SBA Resource Partner
    Over 11,000 volunteers
    380 staffed chapters
    Over 5,000 seminars and workshops
    1.3 million free counseling hours
    440,000 clients served (80,000 Internet)
            About SCORE in Nevada

    85 volunteer business counselors
    Free counseling at seven locations
    One-on-one or team counseling
    E-mail and telephone counseling
    Low cost monthly workshops
    On-site counseling
    Web access –
    About SCORE Nevada

   Special Teams:
   •Customer Service Assessment
       Customer identification,advertising, promotion,
   distribution, follow up

   •Vital Signs Assessment:
       Measurement of vital areas such as
   growth,working capital efficiency, financial leverage,
          Three Locations in Clark County

        The Business Information Center (BIC)
          1951 Stella Lake Street,Las Vegas
                  City Centre Place
          400 South Fourth Street, Las Vegas
        Henderson Business Resource Center
            112 Water Street, Henderson
Resources for Your Business

     Visit SCORE’s Web Site
      Email Counseling for biz advice online
      Locate any chapter
      2,000 pages of content for small
       business owners
      Online seminars
SCORE Resource:

 Free e- Newsletters

 SCORE eNews a free,
 email newsletter with
 small business news
 and how-to’s

 SOHO eSource a free,
 email newsletter on
 leadership topics for
SBA Resource:


Check out the
Starting a Business
and Financing A
Business Sections
Next Steps

                Call   FOR help
                Call    TO help

Lending entrepreneurs the tools to succeed
NMI at a glance…
• NMI is a nonprofit business development
    corporation serving the entire state of Nevada
    for more than 10 years.
•   We are certified by the US Department Treasury
    as a Community Development Financial
    Institution (CDFI).
•   NMI is the only U.S. Small Business
    Administration Intermediary Lender of the
    Microloan Program in the State of Nevada.
NMI’s Mission
  – To enhance the economic self-
   sufficiency and quality of life of
   low to moderate-income
   individuals through
   entrepreneurial training, technical
   assistance and access to loans for
   new and expanding businesses
   throughout the State of Nevada.
What is a Microenterprise?

• A Microenterprise is a small business
 which has 5 or fewer employees.

                        "NMI is great! They
                        help people and give
                        them the little extra
                        push they need."
                               - Daniel Lopez

• Business Microloans
  – Funding Phase
• Business training
  – Business Plan Development Phase
• One-on-one technical business assistance
  – Pre and Post Loan Phase
Microloan Program
• Available to small businesses who demonstrate
    the ability to be successful and cannot access
    bank financing.
•   Loans are available for startup, expansion
    and/or working capital needs.
•   Up to $10,000 for start up and up to $35,000
    for existing businesses.
“What can they use the loan for?”

• Microloans may be used for the
  – Equipment
  – Inventory
  – Supplies
                        ""NMI has helped me
  – Working Capital     financially and helped me
                        learn what I need to know
                        about the business end of this
                                       - Yevette Watts
Business Training
• NMI offers training in the following areas:
  – Business Feasibility
  – Business Foundation
  – Business Plan
  – “Ask the Expert” workshops
  – Financing               "NMI has not only given me
  – Special Topics          financial support with the loan
                                 but also helped me learn how
                                 to manage finance and truly
                                 understand my business."
                                                 - Linda Spivack
Monthly Programs
• Loan Information         • “Ask the Experts”
  Sessions                   Workshop
  –   2nd and4thThursday     – 3rd Thursday of each
      of each month            month

  – 4:00-5:00pm              – 12:00 – 4:30 pm

  – @ 1600 E. Desert Inn     – Location varies
    Las Vegas                  between Henderson
                               and North Las Vegas
Programs Continued
• Business Plan Class
  – 12 Week Course
  – Tues. or Wed. 6:00-
                            "I have passion, I have
    9:00 pm                 commitment and a good
  – 1600 E. Desert Inn Rd   work ethic but without
                            business knowledge and
    Las Vegas               skills, my dream would
  – (Next Class Begins in   have remained a dream.
                            NMI helped me turn my
    September 2003)         dream into a real
                                     - Michelle Palmer
NMI can assist YOU with:

• Developing and/or Tuning-up your
 Business Plan
• Trouble shooting your business
• Identifying local resources for your

• Developing/Packaging your Loan Request
1600 E. Desert Inn Road, Suite 203   116 E. 7th Street, Suite 1
Las Vegas, Nevada 89109              Carson City, Nevada 89701
Phone: (702) 734-3555                Phone: (775) 841-1420x2
Fax: (702) 734-3530                  Fax: (702) 841-2221

113 W. Plumb Lane                    Or visit our website @
Reno, Nevada 89509         
Phone: (775) 324-1812
Fax: (775) 324-1813
A Division of the Commission on Economic Development
Nevada Procurement Outreach Program (POP)

is a cooperative Agreement between the
State of Nevada and the Federal
Government assisting businesses
statewide to initiate or expand
marketing efforts of their products and
   One-on-one counseling
   Network broadcasts, etc.

Brainstorm for specific targets
Provide bid information via e-mail,
broadcast message, etc.
Proactively market firms with purchasing
offices, prime contractors and purchase
Technical Assistance:
   Bid proposals
   Compliance issues
   Prompt payment
Support documentation:

    Required forms
    Inspection & quality control data
    Procurement histories
E-Commerce support:

  Bid announcements download via
  e-mail directly to client computer
  from subscription services, bulletin
  boards, etc; maintain database of
  firms by code/key words for buyers
  and cardholders to access for
  source of supply
Networking Assistance:

   Enhance visibility
   Encourage teaming arrangements
   Identify resources
   Create alliances:

       Mentor protégé, etc.
Nevada Procurement Outreach Program

Active Clients statewide:
776 (currently)

Contract awards valued at:

$713.2 Million (fiscal year 2003 to date)

$387 Million    (2002)

$140 million    (2001)
                         POP Offices:

                         Commission on Economic Development
                         Grant Sawyer Building
                         555 E. Washington Avenue, Ste. 5400
                         Las Vegas, NV 89101
                         Rick Horn, Program Director
                         Kay Keene, Specialist
                         phone: 702-486-2716 fax: 702-486-2701

                         Commission on Economic Development
                         108 E. Proctor
                         Carson City, NV 89710
                         Bob Miller, Specialist     Kathy Dow, Specialist
E x pand 2N evad
                         phone: 702- 687-1813 fax: 775- 687- 4450
                  Financial Assistance
     • Loans
        – Primarily made by private lenders, with SBA guaranties
        – Guaranties are generally up to 85% of loans to
          $150,000; 75% of loans above $150,000
     • Equity Investment
        – Provided by SBA-licensed small business investment
     • Surety Bonds
        – Guaranties of bid, performance and payment bonds

Financial Assistance
          Why SBA Loans are
       Important to Small Business
     • SBA loan guarantees give banker’s an
       added incentive to make small business
     • SBA loans can provide longer terms for
     • SBA loan guaranties allow banks to provide
       funds when bank policy prohibits a loan

Financial Assistance
 SBA Serves a                                                  Equity
 Wide Variety of
 Capital Needs                                        $2.0
                             $1         (Guaranty)
                           (Guaranty)                          SBIC
              $150,000                               Surety
              SBALowDoc                   504        Bonds
                           All Other
                             7(a)        Loans
  $35,000     $250,000

Financial Assistance
          SBA Lending Enhances
          Community Involvement
     • Because of extended maturities of loans,
       businesses are long-term customers
     • Jobs created in the community, increasing
       customer base
     • Cross-selling opportunities for owners and
     • Ability to leverage lender’s available assets to
       meet community needs

Financial Assistance
       Basic 7(a) Loan Guaranty Program

     • You apply for a loan guaranty with an SBA
       participating lender

     • Lender submits application for SBA review and

     • After SBA approval, lender disburses funds

Financial Assistance
                     7(a) Guaranty
                  Program is Versatile
     • Proceeds can be used for a wide variety of
       business purposes
     • Maximum guaranty is 85%
     • 75% when loan exceeds $150,000
     • Maximum guaranteed dollars is $1 million
     • Total loan cannot exceed $2 million

Financial Assistance
          Loan Proceeds Eligible for Most
                  Business Uses
     • 7(a) loans may be used to:
         – Expand, renovate facilities
         – Buy machinery, equipment, fixtures, buildings
           and land for business
         – Finance receivables and augment working capital
         – Refinance existing debt (with compelling reason)
         – Finance seasonal lines of credit
         – Construct commercial buildings
         – Finance direct costs on contracts

Financial Assistance
               Maximum Size Standards
     • Manufacturing
         – 500 employees or less
     • Wholesaling
         – 100 employees or less
     • Service and Retail
         – $6 million or less in annual receipts

     • There are many variations so check with the District Office
       if you feel your business is close to these maximums

Financial Assistance
               Eligibility Requirements
    Business must:
    • Be operated for profit
    • Not exceed size standards
    • Not be engaged in lending, real-estate development,
      investments or speculation
    • Not be engaged in promotion of a specific religion
    • Not restrict patronage
    • Not engage in prurient sexual materials or services
    • Not be a gambling enterprise

Financial Assistance
               SBA Lender Requirements
     • Common documentation includes:
        –   Purpose of loan
        –   Business history*
        –   3 years of company tax returns*
        –   Current financial statements*
        –   Schedule of term debts and leases*
        –   Aging of accounts receivable and payable*
        –   Projected opening-day balance sheet**
        –   Amount of owner investment in business**
        –   Projections of income, expenses and cash flow**
        –   Signed personal financial statements**
        –   Personal résumés**
             • * for existing businesses   ** for new businesses

Financial Assistance
             SBA Borrower Requirements
     • Good character
     • Management expertise and commitment to
     • Reasonable personal contribution or business
     • Feasible business plan
     • Sufficient collateral
     • Ability to repay loan from projected operating
       cash flow

Financial Assistance
     • Flexible maturities:
        – Generally 7 to 10 years for working capital
        – Generally up to 25 years for fixed assets:
            • Real estate
            • Construction
            • Equipment (Not to exceed useful life of
     • Interest rates:
        – Negotiated between borrower and lender
        – Typically cannot exceed prime rate plus 2.75%

Financial Assistance
              SBA One-Time Borrower Fees

  Maturity               Total Loan Amount             Guaranty Fee

  Year or Less           Any amount up to $2 million   0.25%

  Over 1 Year            $150,000 or less              2.0%

  Over 1 Year            Over $150,000 to $700,000     3.0%

  Over 1 Year            Over $700,000                 3.5%

  * Fees apply only to guaranteed portion of loan

Financial Assistance
               Fee Calculation Example

  Total Loan     x Guaranty % =   Max. Guaranty   Total Fee

  $150,000      x   85%      =    $127,500        $ 2,550

  $700,000      x 75%        =    $525,000        $15,750

  $1,000,000    x 75%        =    $750,000        $26,250

  $1,333,000    x 75%         =   $1 million      $35,000

Financial Assistance

     • Personal guaranties from principals owning
       20 percent or more

     • Liens on personal assets may be required

     • Loans are not declined solely for
       insufficient collateral

Financial Assistance
               SBA 7(a) Loan
             Guaranty Programs
     • Lender submits a completed loan application
       to the SBA
     • SBA analyzes entire application
     • Approval process usually 5 days or less
     • Processing can occur in the local District Office,
       Hazard, KY or Sacramento, CA
     • Type of loan determines processing location

Financial Assistance
         Low Documentation Loan Program

     • For loans up to $150,000
        – Generally 7 to 10 years for working capital;
        – 25 years for fixed assets
     • 85% guaranty
     • One-page SBA application
     • SBA response to lender within 36 hours

Financial Assistance
                  Eligibility Issues on
                 SBALowDoc Program

     •   Maximum loan amount
     •   Credit history
     •   Character
     •   Size standards

Financial Assistance
                  Character Issues in
                 SBALowDoc Program

     • Prior criminal record by any owner,
       principal, partner or authorized official of
       the business may disqualify applicant or
       require submission under regular 7(a) loan

Financial Assistance
         Use of Proceeds for SBALowDoc
                       Debt Refinancing
       • May refinance debt
           – To participating lender using not more than
             25% of proceeds of the requested New
             SBALowDoc loan
           – To other lenders using entire proceeds of the
             requested New SBALowDoc loan
           – Refinancing must result in 20% cash-flow
             improvement for borrower

Financial Assistance
           Ineligible Loans Under
           SBALowDoc Program

     •   Export Working Capital Loan Program
     •   International Trade
     •   CAPLines
     •   Defense Loan and Technical Assistance

Financial Assistance
            Other Ineligible Loans in
             SBALowDoc Program
     • Pollution and Environmental Control Loans
     • Employee Stock Ownership Plans (ESOP
       or ERISA)
     • Community Adjustment & Investment
       Program (CAIP)

Financial Assistance
                   Guaranty Fee for
                 SBALowDoc Program
     Loan Total                 Fee

     $150,000 or less            2%

     Maturity of 12             1/4%
      months or less

Financial Assistance
       Environmental Investigation
             on SBALowDoc
    • Required on commercial real estate collateral for
      any loan in excess of $25,000
    • Questionnaire consistent with American Society
      for Testing and Materials (ASTM) minimums
    • Addresses environmental issues of real estate
      within one mile radius or more
    • Additional guidance in SOP 50-10(4), Subpart
      “A”, Chapter 5, paragraph 7

Financial Assistance
Enhanced SBAExpress

            An enhanced guaranty
            program your lending
           institution will not want
                    to miss!
Program Designed to:
• Increase the number of Smaller
  SBA Loans
• Increase Lender Participation
  • Minimize SBA Forms/Procedures
  • Expedite SBA Loan Processing
  • Standardize Processing of Routine
  • Attain Efficiency of Centralization
Key Features:
•   Maximum Loan Amount - $250,000
•   Extended As Pilot Through 9/30/05
•   Available to SBA Lenders with 85%
•   Available to Non-SBA Lenders
    Processing Significant Number of
    Business Loans of $50,000 or Less
•   Lenders Use Mostly Own Documents &
Key Features (continued):

•   Loan Notes - Legally Enforceable
•   Loans Processed in Sacramento
•   May Be Faxed - Soon Via Internet
•   Usually Instant SBA Response -
     24 Hours Assured
•   Purchases -Little Rock & Fresno
    Loan Servicing Centers
Other Features:
• Lenders May Charge Interest Rates
    up to:
     • 6.5% over Prime for Loans of
       $50,000 or less
     • 4.5% over Prime for Loans above

•   Standard Guaranty Fees Apply
 Other Features (continued):
• Multiple Loans May Be Made but:
  • Must Not Circumvent SBA Fees
  • Total May Not Exceed $250,000

• No Collateral - Loans of $25,000 or Less
• Lender Follows Own Collateral Policy
  Over $25,000
Other Features (continued):
• Revolving Lines Eligible
     • Maximum - Seven Years
     • Termouts - Available at Outset

•   May Be Sold on Secondary Market
•   May Be Accessed by Credit Card
•   Applicant Commits to Business
    Purposes - Lender Not Required to
    Monitor Each Disbursement
Lenders Use Mostly Own
Documentation, Including:

• Application
• Internal Credit Memoranda
• Loan Notes (Legally Enforceable)
• Collateral Documents
• Liquidation Documents
Basic Borrower Information Sheet

Forms Submitted to SBA
  • SBA Form 1919
  •Eligibility Checklist (Lenders with
  Authority to Determine Eligibility do Not
  Submit Checklist)
Lender Uses Mostly
Own Procedures:

•   Same As for Non-SBA Loans
•   Lender - Does Credit Analysis
•   Qualified Lenders do Eligibility
 Ineligible Businesses
• Types of businesses not allowed
  •   Agriculture
  •   Fishing
  •   Medical Facilities
  •   Mining
  •   Firms in business in other countries
  •   Teaching, indoctrinating of religion
  •   Sex related
  •   Gambling
Refinancing Rules
• SBA debt may not be refinanced
• Non-SBA borrower debt
• No longer meets needs
• Meets SBA’s minimum cash flow
  improvement requirement
• Current last three years
• No conflict of interest
 Not Eligible
• Piggy-back loans
• 90% start-up or real estate
• Previous government loss
• Any yes response on Form 1919
• Application previously submitted
• Violation of ethical requirements
• Environmental problems
Lender Authorization
• Responsible for completeness of
  loan authorization
• Lender signs on behalf of SBA
• Closes and disburses loan using
  own procedures
• Sends signed copy of authorization
  to SBA
               (Export Working Capital Program)
   •   Short-term financing for small exporters
   •   SBA guaranty — up to 90% of the loan or $1 million
   •   One-page application; answer usually 10 days or less
   •   Maturity —
       – Matches a single transaction cycle up to 18 months, or
       – Supports a line of credit, generally 12 months
   • Repaid from the proceeds of the export sales
   • May be used for both —
       – Pre-shipment working capital
       – Post-shipment exposure

Financial Assistance
                 (International Trade Loan)
     • Long- and short-term financing
     • Guaranty amounts up to $1.25 million
     • For businesses that are —
        – Engaged or preparing to engage in international trade
        – Adversely affected by import competition
     • May be used for —
        – Working capital and/or
        – To purchase facilities or equipment that will be used
          within the U.S. for producing goods or services

Financial Assistance
                 Loans for Fixed Assets
         504 Certified Development Company Program

     • Long-term, fixed-rate financing

     • Up to $1.3 million in SBA-backed debentures

     • SBA debenture guaranty of up to 40% of total

     • Must create or retain one job for every $35,000
       of SBA debenture proceeds

     • DELTA funding also available under this program

Financial Assistance
             Benefits of a SBA 504 Loan

     • High-leveraged financing for fixed-asset

     • Long-term pay back - 10 or 20 years

     • Lower interest rate

Financial Assistance
             To Qualify for a 504 Loan*

     • Business must be operated for a profit
     • Tangible net worth of less than $7 million
     • Average net income of less than $2.5
       million for the preceding two years

                * Business cannot be involved in speculation
                  or rental real estate investment

Financial Assistance
                       A Typical 504 Project
     • A private sector loan covering up to 50%
     • A loan from the CDC covering up to 40%
       (100% SBA-guaranteed debenture) and
     • At least 10% equity from the small business
     • Participating lender has first lien on assets

Financial Assistance
    Small Business Programs
•   HUBZone Program
•   8(a) Business Development Program
•   Womens Program
•   Veterans Program
•   Small Disadvantaged Business Program
•   Set-aside Program
    Small Business Contracting
•   Certificate of Competency (COC) Program
•   Size Standards Program
•   Subcontracting Program (Primes)
•   PRO-Net Program
•   SUB-Net Program (Primes)
   Small Business Certification
• Small Business Certification Requirement
  –   HUBZone Program - SBA
  –   8(a) Business Development Program - SBA
  –   Small Disadvantaged Business Program - SBA
  –   Veteran Program - VA card / DD214
  –   Disabled Veteran Program - VA card
Small Business Contracting
•   Procurement Center Representatives
•   Commercial Marketing Representatives
•   Certificate of Competency Specialists
•   Size Specialists
•   Business Development Specialists
    – 8(a) Business Development Program
    – HUBZone Empowerment Program
    – Small Disadvantaged Business Program
   Small Business Contracting
• Procurement Center Representatives
     Monitors/Evaluates Assigned Federal Agencies
     Reviews Small Business Coordination Record Forms
     DD From 2579
     DOE F- 4220.2
     Reviews Subcontracting Plans
  Small Business Contracting
• Commercial Marketing Representatives
     Monitors/Evaluates Prime Government Contractors
     Monitors Subcontracting Plans
     Provides Small Business Sources
     Monitors SF294 - Subcontracting Report Individual
     Monitors SF295 - Summary Subcontracting Report
     (Virtual Library)
    Small Business Contracting
• Certificate of Competency Representatives
     Evaluates Small Businesses that are low bidders
     on federal solicitation that apply for a
     Certificate of Competency (COC)

     Provide monthly status on COC’s issued to the
     Contracting Activity

     Responsible for the Small Business throughout
     the life of the awarded contract.
    Small Business Contracting
• Size Specialist
  – Makes determinations on Size Protests
     •   Small Business Set-aside
     •   Very Small Business
     •   Certificate of Competency
     •   8(a) Business Development
     •   HUBZone
  – Provides North American Industry
    Classification System (NAICS) information
   Small Business Contracting
• 8(a) Business Development Specialist
  –   Partnership Agreements
  –   8(a) Participants Portfolio
  –   8(a) Participants Compliance & Eligibility
  –   Business Development Training
  –   HUBZone Program
  –   Small Disadvantaged Business Program
  –   Certification Verification
          SBA Contracting Assistance

      • 8(a) Business Development Program
      • HUBZone Program
      • Small Disadvantaged Business Program

Federal Government Contracting Assistance

Federal Government Contracting Assistance
            8(a) BD Program Objectives

     • (Sec. 204 of Public Law 100-656)

     • “to promote the business development of
       small business concerns owned and
       controlled by socially and economically
       disadvantaged individuals…”

Federal Government Contracting Assistance
                   Term of Participation
                   Start Date is Date of Approval
      Year 1
           2                                   developmental
            3                                      stage

      Year 5
           6                                   transitional
             7                                    stage
       Continuation in the program is dependent on the firm’s continuing
       eligibility as a socially and economically disadvantaged
       owned/operated firm and continued compliance with the 8(a)BD
       participation agreement.

Federal Government Contracting Assistance
            Personal Eligibility Criteria

            •Social Disadvantage

            •Economic Disadvantage

Federal Government Contracting Assistance
                  Social Disadvantage

                  • Subjected to racial or
                    ethnic prejudice or
                    culture bias because
                    of their identities as
                    member of groups,
                    without regard to
                    individual qualities.

Federal Government Contracting Assistance
     Socially Disadvantaged Determinants
   Individuals are presumed to be socially disadvantaged if they are a
   U.S. Citizen and a member of one of the following groups:
       –Black American
       –Asian Pacific American
       –Hispanic American (includes individuals of   Spanish & Portuguese descent).
       –Native American
       –Subcontinent Asian American

Federal Government Contracting Assistance
          Requirements for Persons Not
          Members of Designated Group

               • Establish their case by a preponderance of the
               • The disadvantage may stem from race, ethnic
                  origin, gender, physical handicap, long term
                  environmental isolation, or other similar causes;
      • The applicant must have personally suffered
        disadvantage in the United States;
      • The disadvantage must be substantial & chronic;
      • The discrimination must have negatively impacted
        on business advancement .

Federal Government Contracting Assistance
     Non-Members of Designated Groups

        • Substantial & chronic;

        • Discrimination must have negatively
          impacted on business advancement .

Federal Government Contracting Assistance
     Types of Evidence for Preponderance
    • Documentary evidence which corroborates or
      supports assertions made by an applicant such as:

       •Personnel Records                              • Payroll Records
       • Rejection letters on job applications.        •Financial statements.
       • Denials of credit applications.
       • Documents relating to rejected contract offers, i.e., bid abstracts,
       • Contemporaneous records memorializing meetings, conversations,
               negotiations, telephone calls, etc.
       • Documents setting forth company policy(ies) which are alleged to be

Federal Government Contracting Assistance
                Net Worth Criterion:
        After excluding the individual’s equity in the
        firm and equity in the primary residence, net
                   worth may not exceed

                 Net Worth
    less         equity in primary residence
    less         equity in business
    =            adjusted net worth
                 (which cannot exceed $250,000)

Federal Government Contracting Assistance
           Economically Disadvantaged

    • Individuals are socially disadvantaged
      persons whose ability to compete in the free
      enterprise system has been impaired due to
      diminished capital and credit.

Federal Government Contracting Assistance
            Business Eligibility Criteria
            •Control and Management
            •Potential for Success
            •Good Character

Federal Government Contracting Assistance
          What Determines Ownership?
    • At least 51% unconditional ownership by the
      disadvantaged person(s).

    • Partnerships: Agreements must reflect
      unconditional ownership.

    • Limited Liability Company: Disadvantaged
      individuals must own at least 51% of each class of
      member interest.

Federal Government Contracting Assistance
     Corporate Ownership Determination

     • Corporations:
         – Disadvantaged persons must own at least
           51% of each class of voting stock and at
           least 51% of all outstanding stock.
         – Stock option plans for nondisadvantaged
           individuals will be viewed as if they have
           been exercised .

Federal Government Contracting Assistance
   Control and Management Determination
    • Partnerships: Agreements must reflect
      unconditional management by disadvantaged

    • Limited Liability Company: One or more
      disadvantaged individuals must serve as
      management members with unconditional

Federal Government Contracting Assistance
             Corporate Control and
            Management Determinants
    • Corporations:
        – Disadvantaged directors of the board must
          control the board by actual number of votes and
          must be able to establish a quorum without the
          presence of non-disadvantaged directors.

Federal Government Contracting Assistance
        Disadvantaged Individual must:
  • Hold the position of President or Chief Executive
    Officer, Managing Partner or LLC Managing Member
  • Be the highest compensated individual
  • Have the ability to Hire and Fire
  • Set Policies
  • Have the ability to commit firm to contracts
  • Have the ability to the control Budget and Financial

Federal Government Contracting Assistance
                    Size Determinants
    Firms Must be Small Based on Their Primary SIC
    Code, Including Affiliates

    Size is determined either by:
            – average 3 years revenues
            – # of employees (manufacturers, dealers, wholesalers)

       See 13 CFR 121 Size Regulations or visit our website:

Federal Government Contracting Assistance
   Factors Considered for Potential Success
    • Factors considered:
        – Proof of two years operation in the firm’s primary
          industry as verified by revenues reported in
          business tax returns.
        – Financial capability: sufficient capitalization,
          financial performance, bonding capacity,
          manageable debts.
        – Managerial and Technical capability:
          performance on previous contracts, firm has the
          necessary personnel, licenses, certifications,
          facilities, prior experience.

Federal Government Contracting Assistance
             Other Factors Considered
               for Potential Success

      • Management capability: Education, experience
        and training of CEO and other managers,
        magnitude and complexity of past/current jobs,
        management systems.

      • Qualifications for ability to perform on Federal
        contracts: relevant contracting experience and
        the ability to meet Federal procurement
Federal Government Contracting Assistance
               Conditions for Waiving
                the Two-Year Rule
     • The individual or individuals upon whom
       eligibility is to be based have substantial and
       demonstrated business management
     • The applicant has demonstrated technical
       expertise to carry out its business plan with a
       substantial likelihood for success if admitted
       to the 8(a) BD Program;
     • The applicant has adequate capital to carry
       out its business plan as a Participant;

Federal Government Contracting Assistance
        Other Conditions for Waiving the
                Two-Year Rule
   • The applicant has a record of successful
     performance on contracts from governmental
     and nongovernmental sources in the primary
     industry category;
   • The applicant has, or can demonstrate its
     ability to timely obtain the personnel,
     facilities, equipment, and any other
     requirements needed to perform such
     contracts as a Participant.

Federal Government Contracting Assistance
             Ineligible Business Factors
    • Ineligible businesses: brokers; debarred or
      suspended persons or concerns; nonprofit
      organizations. Franchises may be allowed
      contingent upon SBA review of the franchise

    • A business may participate only once. Even if
      ownership and control has completely changed,
      firm may not re-apply.

    • Any person who has used his/her
      disadvantaged status to qualify another firm
      shall be regarded as non disadvantaged.

Federal Government Contracting Assistance
               Benefits of Participation
    • Sole Source Contracts:
        – Up to $3 million for services and construction and $5
          million for manufacturing.
    • Competitive threshold:
        – When the estimated value (including options) exceeds
          $3 million for services and construction and $5 million
          for manufacturing, requirement will be competed
          among 8(a)BD firms.
    • Federal Acquisition Regulations (FAR):
        – Apply to and govern 8(a)BD contracts.

Federal Government Contracting Assistance
                  Filing Applications
    • Applications for the 8(a)BD program are filed
      with the Division of Program Certification &
      Eligibility (DPCE) Unit that services the Federal
      Region containing your state.

       For assistance in determining your Federal
       Region, contact the SBA District Office servicing
       your locality or state.

Federal Government Contracting Assistance
                  Processing Centers
                 Philadelphia DPCE - Regions 1 & 3
                     900 Market Street, 5th Floor
                       Philadelphia, PA 19107
                            (215) 580-2779

                   Dallas DPCE - Regions 5, 6 & 7
                  4300 Amon Carter Blvd, Suite 116
                        Ft. Worth , TX 76155
                            (817) 684-5315

             San Francisco DPCE - Regions 2, 4, 8, 9 & 10
                    455 Market Street, 6th Floor
                     San Francisco, CA 94105
                           (415) 744-0328

Federal Government Contracting Assistance
             Expectations of Program
    • Self marketing to federal procurement agencies.

    • Submission and annual update of business plan.

    • Access to company records by SBA.

    • Informing SBA of any changes affecting 8(a)BD
      eligibility, i.e. changes in business structure,
      ownership, etc.

Federal Government Contracting Assistance
              Additional Expectations
              of Program Participants

  • Submission of year end financial statements and
    annual tax returns.

  • Participation in business development training
    opportunities and networking offered by SBA.

  • Staying current in financial obligations to the
    Federal Government.

Federal Government Contracting Assistance
          Small Disadvantaged Business

Federal Government Contracting Assistance
          Purpose for SDB Certification

     • Reform the SDB certification process
     • Ensure that only eligible firms receive
        SDB program benefits
     • Establish a formal process at the front
        end to determine SDB eligibility
     • No longer rely on firms’ self-certification
Federal Government Contracting Assistance
                SDB Program Benefits

      • When competing for government
        contracts, SDBs in industries that show
        the ongoing effects of discrimination will
        be able to:
         – participate in Federal SDB price evaluation
           adjustments (up to 10%)
         – other evaluation factors or sub-factors
         – Set-aside programs

Federal Government Contracting Assistance
           Other SDB Program Benefits

      • Subcontracting opportunities as
        authorized under SBA’s section 8(d)
        subcontracting program.
      • Remain on the SBA maintained list of
        certified SDBs for a period of three years
        from the date of certification.

Federal Government Contracting Assistance
          When Price Evaluation Applies
    • In competitive acquisitions
    • Shall not be used in acquisitions that-
          - Are not greater than the acquisition threshold
          - Are awarded pursuant to the 8(a) program
          - Are set aside for small business concerns.

Federal Government Contracting Assistance
                       SBA’s Role

     • Certify all qualified concerns requesting
       SDB certification
     • Decide protests and appeals
     • Maintain a national public on-line
       registry of certified SDBs for access by
       contracting officers and the general

Federal Government Contracting Assistance
                   SBA Field Offices

     • Provide information and required
       application forms to any firm interested
       in SDB certification

Federal Government Contracting Assistance
             SDB Certification Process

      • Applications must be submitted to SBA
      • Applicants notified in 15 days whether
        the application is complete and suitable
        for evaluation
      • Ownership and control decision within
        30 days of receipt of a complete
        application package

Federal Government Contracting Assistance
                    SDB Application

       •SBA Form 1010

       •SBA Form 413

       •IRS Form 4506

Federal Government Contracting Assistance
        Reapplying for SDB Certification

       • Firms may reapply 12 months after final
         decision of SBA to decline its application
       • If it is determined that the firm is not owned
         and controlled by individual(s) claiming
         disadvantaged status and no appeal is filed
         with SBA’s Office of Hearings and Appeals,
         a firm may apply for a new ownership and
         control determination at any time

Federal Government Contracting Assistance
    (Historically Underutilized Business Zone Program)

      • Develops historically underutilized urban and
        rural areas

      • Establishes federal award preferences for small

      • Lists qualified businesses on PRO-Net®

      • Information is available at

Federal Government Contracting Assistance
          The HUBZone Empowerment
              Contracting Program
         •Community Based:

Federal Government Contracting Assistance
       Purpose of the HUBZone Program

     • Provide federal contracting assistance for
       qualified small business concerns located
       in historically underutilized business
       zones to:
     • Increase employment opportunities
         – Stimulate capital investment in those areas
         – Empower communities through economic
           leveraging and the “multiplier effect”

Federal Government Contracting Assistance
                    Qualified Areas
     • Qualified Census Tracts (HUD) - 7,000
     • Qualified Non-metropolitan Counties - 900
       – Median household income is less than 80%
         of the non-metropolitan state median
         household income (Census)
       – Unemployment rate that is not less than
         140% of the state-wide average
         unemployment rate (BLS)
     • Indian reservations (external boundary)

Federal Government Contracting Assistance

    • Based upon a percentage of the total value
      of federal prime contract awards
        –   1999   - 1%
        –   2000   - 1.5%
        –   2001   - 2%
        –   2002   - 2.5%
        –   2003   - 3% and each year thereafter

Federal Government Contracting Assistance
          Requirements to be a Qualified
                 HUBZone SBC

    • Four Requirements
        – Must be a small business
        – Concern must be owned and controlled only
          by U.S. citizens
        – The principal office of the concern must be
          located in a HUBZone; and
        – At least 35% of the concern’s employees
           must reside in a HUBZone
Federal Government Contracting Assistance
              The Certification Process
   • Fully electronic, Internet-based
   • Integrated with Pro-Net
   • SBA will not process incomplete packages
   • Processing time - 30 days
   • SBA may request additional information or
     clarification any time after submission
   • SBA’s decision will be in writing

Federal Government Contracting Assistance
               Program Examinations
    • Eligibility verification
    • Scope of review
       – Verification: eligibility requirements at time of
         application and examination
       – location, ownership & employment percentage
    • Time frame - when notified of a possible
      material change in status or random,
       at the discretion of SBA

Federal Government Contracting Assistance
               Contractual Assistance
               Procurement Methods
    • Set-aside awards
    • Sole source awards
    • Awards through full and open competition
       after application of a price preference in
       favor of the HUBZone SBC

Federal Government Contracting Assistance
         Requirements Not Available for
              HUBZone Set-aside
    • Federal Prison Industries (FPI)
    • Javits-Wagner-O’Day Act (JWOD)
    • Current 8(a) requirements
    • Micro Purchase requirements - for $2,500
       or less

Federal Government Contracting Assistance
         Website and Mapping Capability

         •Identification of qualified areas:
         •Non-metropolitan counties
         •Census tracts
         •Indian reservations
         •EZ/EC s etc.
Federal Government Contracting Assistance
          The HUBZone Empowerment
              Contracting Program
    For further information contact :
      Michael P. McHale, Asst.Admin. Office of
      Procurement Policy and Liaison ,
      SBA Office of Government Contracting
          (tel) (202) 205-6731
          (fax) (202) 205-7324

Federal Government Contracting Assistance
                 The SBA Homepage


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