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8(a) Two-Year in Business Waiver
The SBA does not have a specific amount of time that a business has to have been in business. It is possible to get certified even if you have not been in business for two years. You need to be able to show that you have "Potential for Success." Since you have not been in business for two years you will need to be able to show: - That your company has sufficient capital for its business plan.
- That your company has completed contracts in its field of business.
- That the owner who the application is based on has sufficient experience in the industry.
- That the company has the technical knowledge to perform if it is admitted into the 8(a) program.
- That your owner has the ability to get and retain the staff, equipment and anything else needed for the company to operate.
If you are a funded, properly managed, and experienced business person you should be able to get a two year waiver. Please call with any questions on this service. |  | | | | The two basic factors to whether or not a two year waiver is called for are:
1. Has the applicant concern been in business for years as evidenced by two tax returns? 2. Has the applicant concern generated business in its primary NAICS code for the preceding two years?
Both must be true.
Sometimes it can be unclear as to whether or not you need to complete a two year waiver. Following I have laid out some scenario’s so hopefully you can get a good understanding when you have to do one and when you don’t.
Scenario I
Year 1 $0 sales
Year 1 $189k sales
Year 3 $369k sales
Year 4 May - The owner finally quits his other employment and starts devoting full time to the business
Year 4 $857k sales
Year 5 January - application time
No
The two year waiver is not required because the firm has generated revenues for the last 2-years. However, the SBA will look at the owner’s management experience to confirm potential of success.
Scenario II
Year 1 - $100k in sales
Year 2-20 $500k in sales
Year 21-22 $0 sales
Year 23 January – new owner purchases the business
Year 23 - $200k in sales
Year 24 January – application point
Yes
The two you waiver will be required in this scenario. Sense the firm did not generate revenues for the last 2-years in its primary NAICS code.
Scenario III
Year 1 - $250k in sales owner 1 40%, owner 2 30%, owner 3 30% - owner 1 is president and signs contracts, is highest paid, and is in control of the business and its decisions
Year 2 - $500k in sales
Year 3 - $500k in sales
Year 4 - $500k in sales
Year 5 December – owner 1 buys out owner 2 and become 70%
Year 5 - $500k in sales
Year 6 January – application time
No
A two year waiver is not required since the firm has been in existence for more than 2-years. In this scenario the SBA will review the legal documents closely. The documents will have to indicate that the owner has been the President (highest officer) for some time and that owner 1 has been signing contracts on behalf of the company for some time. The SBA will also look at all potential control issues closely to be sure there is no one else with control over owner 1 – for example is the licenses for the company in owner 1’s name. The SBA will further look at potential for success in regards to financing/access to capital.
Scenario IV
Year 1 - $250k in sales
Year 2 - $500k in sales
Year 3 - $500k in sales
Year 4 - $500k in sales
Year 5 December - sold to a new owner from outside the company
Year 5 - $500k in sales
Year 6 January – application time
No
Although a two year waiver is not needed in this scenario the SBA is still not going to approve the applicant concern unless the there is likelihood for success. The SBA will be looking at the new owners resume and contracts signed sense the new owner took control to establish this. You will not be able to successfully apply immediately after the purchase no matter how strong the resume/experience of the purchaser. In a best case you are looking at several months for the new owner to be in place, in a typical case you are looking at 6 months for the new owner to be in place, and in the worst case you are looking at two years for the new owner to be successfully running the business before an application will be successful. These difference cases are based on strength of the new owner resume in the applicant concerns field of business and in the owner’s performance financially and on contracts sense taking control. | | | | | | | | | | Don't Wait. You May Be Able to Apply Today! | Fee: $1,100.00 | | |
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Fee : $1100.00
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