8(a) BD Program Update: SBA Issues Rule Extending 8(a) BD Program Participation

Earlier this week, on January 13, 2021, the U.S. Small Business Administration (SBA) issued an interim final rule that allows companies in the 8(a) Business Development (8(a) BD) program to extend their participation in the program for up to one additional year.  The extension is intended to help small businesses that were participants in the 8(a) BD program as of March 30, 2020 (the date of the nationwide coronavirus emergency disaster declaration) and that may have been adversely affected by the COVID-19 pandemic in their ability to participate and receive the full benefits of the program.

Under the interim final rule, revised section 124.2 of the SBA regulations provides that for small businesses participating in the 8(a) BD program as of March 13, 2020, and through January 13, 2021, the SBA will extend the program term by one year unless the business declines the extension.  If any business that was a participant in the 8(a) BD program as of March 13, 2020, graduated or left the program before January 13, 2021, it must notify the SBA of its intent to be readmitted for a period of one year from the date it completed its program term.  This notification must be received by the SBA no later than March 15, 2021.  In addition, any small business that wishes to be readmitted must certify that it continues to meet program eligibility requirements.

The interim final rule also revises section 124.2 of the SBA regulations to clarify that any period of extension will be added to the business’ transitional stage of participation in the 8(a) BD program.

Lastly, the interim final rule revises section 124.509 of the SBA regulations to clarify how an extension of participation will impact the 8(a) business’ requirement to attain targeted dollar levels of non-8(a) revenue in its extended program term.  Specifically, the target non-8(a) business activity that applies in the final year of the transitional stage of 8(a) BD program participation (year nine) – currently 50% non-8(a) revenue – will apply to any extended program term that is tacked on because of the participation extension.

The interim final rule became effective January 13, 2021, and comments are due by March 15, 2021.

To read or obtain a copy of the interim final rule go here.

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