Women Entrepreneurs: Solid Preparation Required If You Want to Qualify Under 8(a) Program

The purpose of the 8(a) program run by the federal Small Business Administration (SBA) is to help small companies owned and operated by socially and economically disadvantaged persons to develop their businesses. Companies that qualify under 8(a) have the advantage of certain preferences in government contracting.

Under federal regulations for the program, businesses owned by racial minorities such as black Americans are presumed to be “socially disadvantaged.” However, businesses owned by women who are not members of a minority group don’t enjoy this presumption. Instead, the owner must establish her individual disadvantage, on the basis of a preponderance of the evidence, that she has suffered discriminatory treatment because of her gender and that this treatment has impeded her entry into or advancement in the business world.

If you are a woman entrepreneur, it can become a significant challenge to show that your advancement in business was stunted because of a social disadvantage that stems from chronic and substantial gender discrimination. Applicants must prepare their submission to the SBA as if they are preparing to go to trial – with solid evidence. In nearly every case, when a woman appeals the denial of 8(a) status based on the agency’s determination that she was not disadvantaged due to gender discrimination, she is unsuccessful. Thus it’s important that potential applicants understand what they need to do to submit a strong, substantiated application.

Proving gender discrimination is difficult, particularly because it is not the sort of thing that is generally witnessed and a woman’s testimony is often the only evidence there is. Fortunately, submitting a Personal Eligibility Statement (PES) to the 8(a) program that is truthful, complete, and uncontradicted may alone establish that the applicant has been socially disadvantaged due to gender discrimination.

There is no requirement that the PES be corroborated by other evidence. However, in order to pass the standard of review – preponderance of the evidence – that is used by the SBA in reviewing these applications, the PES must be meticulously detailed. Furthermore, if there are statements in a PES that can be supported by available evidence, that evidence must be included, or the SBA will see the omission as an indication that the claim is unfounded or incapable of being fairly evaluated.

This lesson is illustrated clearly in a ruling upholding on appeal the SBA’s decision to deny an 8(a) application in which a woman described in her PES her company’s rejection for contracting opportunities by a male supervisor at the National Credit Union Administration (NCUA). After a long business relationship with the NCUA, this business owner was subjected to repeated sexual advances by this supervisor, which she rejected.
The SBA found that this example did not sufficiently demonstrate that the NCUA selected less qualified competitors as a result of discrimination.

Additionally, the SBA wondered why the applicant’s submission lacked an affidavit from the applicant’s attorney who had apparently been a witness to the incident, proof that the applicant’s employees were qualified for the positions, and/or documents showing what the NCUA’s personnel requirements had been. All of this evidence was available to the applicant but had not been provided. The claim was denied as insufficient, and the denial was upheld on appeal.

In another case, the ruling was that it didn’t matter if six other states had certified a woman as socially disadvantaged or if there were newspaper articles, statistics or studies that proved a pattern of discrimination. If the claims are not sufficiently supported by concrete evidence, the application will be denied.

If you feel that you qualify for this program, and are having difficulty compiling your evidence, it might be worth having an attorney look over your submission materials, and avoid getting off on the wrong foot.

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