SBA Certification & SBA 8a Annual Review Requirement, SBA Form 1450 – 8(a) Annual Update, SBA Form 413, SBA Form 601 

SBA Certification & SBA 8a Annual Review Requirement, SBA Form 1450 - 8(a) Annual Update, SBA Form 413, SBA Form 601 

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Under 15 USC 636(j)(10), each 8a Program and SBA certified government contracts participants, inlcuding limited liability companies, corporations and other legal entities are required to submit a business plan to SBA as a condition of participation and to review that plan with the Agency annually.

As a part of this 8a Annual Review Requirement, the SBA collects information on the “8(a) Annual Update” Form, SBA Form 1450 and SBA Form 601 to ensure eligibility for participation in the 8a Business Development Program according to the 8a requirements listed in 13 Code of Federal Regulations 13 CFR 124.112.

Government contracting firms wishing to remain eligible for the 8a Program must submit the required 8a annual review forms to the SBA. Failure to submit the 8a Annual Review report can lead to termination from the 8a Program.  You should always seek an annual review extension to the deadline as early as possible.

Although you may have a viable excuse, the termination will stand on appeal without a written extension from the SBA. These are situations where Watson’s 8a certification lawyers and consultants can help.

SBA Certification: Information Required in the 8a Annual Review Requirement in Addition to SBA Form 413, SBA Form 601 & SBA Form 1450

As part of you certified 8a annual review requirement, small businesses, including limited liability companies, limited partnerships and corporations,must submit SBA Form 1450, among other things, the following:

Personal Financial Information: A Personal Financial Statement, SBA Form 413, must be completed and submitted for each disadvantaged owner upon whom 8a certification was based. A separate form should be completed for the spouse of such owner. For jointly held assets and liabilities in which ownership is held equally by both spouses, one-half of the value should be listed on each form.

Property that is legally in the name of one spouse would be considered wholly-owned by that spouse regardless of whether or not the couple lives in a community property state. For other shared assets, the value of the percentage of ownership held by each individual should be listed on each person’s form. Each individual reporting must also include his/her most recent tax return, including all schedules, attachments and supporting 1099 forms. (13 CFR 124.112 (b) (3))

A Personal Financial Statement: SBA Form 413, must be completed and submitted for each disadvantaged owner upon whom 8(a) certification was based. A separate form should be completed for the spouse of such owner. For jointly held assets and liabilities in which ownership is held equally by both spouses, one-half of the value should be listed on a separate SBA form 413.

Property that is legally in the name of one spouse would be considered wholly-owned by that spouse regardless of whether or not the couple lives in a community property state. For other shared assets, the value of the percentage of ownership held by each individual should be listed on each person’s form. Each individual reporting must also include his/her most recent tax return, including all schedules, attachments and supporting 1099 forms. (13 CFR 124.112 (b) (3)). These are all critical sub-elements of the 8a Annual Review Requirement.

8a Program Annual Update – Adjusted Net Worth

To remain economically disadvantaged in the SBA 8(a) Program each 8a applicant(s) Adjusted Net Worth must be less than $750,000 when submitting your 8(a) Annual review.

8(a) Annual Update – Excessive Withdrawals. Withdrawals are excessive if in the aggregate during any fiscal year of the Participant the 8a company exceeds (i) $250,000 for firms with sales up to $1,000,000; (ii) $300,000 for firms with sales between $1,000,000 and $2,000,000; and (iii) $400,000 for firms with sales exceeding $2,000,000.

Annual Compensation Data: A record of all payments, compensation, and distributions (including loans, advances, salaries, and dividends) should be made by the Participant to each of its owners, officers or directors, or to any person or entity affiliated with such individuals. Please complete Attachment A, “Individual/Entity Compensation Worksheet.” (13 CFR 124.112(b)(5)). Learn more about the Service Contract Act and how it will apply to your employees when you are 8(a) certified.

Transferred Assets: A record must be completed by each individual claiming disadvantaged status regarding the transfer of assets for less than fair market value to any immediate family member or to any trust where the beneficiary is an immediate family member, within two years of the date of the annual review. The record must provide the name of the recipient(s) and family relationship, and the difference between the fair market value of the asset transferred and the value received by the disadvantaged individual. (13 CFR 124.112 (b) (4)). Be also mindful of the consequences of SBA Fraud   and unfavorable CPARS ratings.

Talk to An Attorney and Consultant. Take the Next Step

For help meeting your 8a Annual Review requirement, help with SBA Form 413,  SBA Form 601 & SBA Form 1450, call our SBA certification consultants and lawyers at 1-866-601-5518.