HispanicBusiness

Perhaps it's the millions of layoffs across the country, which have taken a disproportionate toll on minorities. Or maybe it's the fact that the United States recently elected its first minority president.

It almost certainly has something to do with the stimulus package that is poised to pump hundreds of billions of dollars back into the clogged arteries of the economy.

Whatever the case, the division of the federal Small Business Administration that specializes in helping minority-owned small businesses secure government contracts is abuzz with citizen inquiries.

The official title of the booming division in question is the 8(a) Business Development Program, which confers the much-coveted 8(a) status to businesses owned by socially and economically disadvantaged people.

The trend began in October, when the number of 8(a) applicants skyrocketed by 25 percent from the month before.

"Prior to October of '08, we were receiving between 60 and 80 applications per week," Joe Loddo, the associate administrator for the federal SBA 8(a) Business Development Program, told HispanicBusiness.com. "Beginning in October, that rose to between 80 and 100, and has continued to maintain since then."

It's the busiest the division has been in at least 10 years, he added.

For the disadvantaged business owner, becoming an 8(a) business is an attractive option. This is because many federal agencies – such as the U.S. Department of Defense, Environmental Protection Agency and Department of Energy -- set aside some lucrative contracts specifically for 8(a) companies.

For instance, in 2000, a New Orleans-based 8(a) company with about 100 employees called Critique Resource Consulting landed a $23 million contract with the U.S. Dept. of Energy for administrative services.

All told, some 8,000 8(a) companies currently exist in the United States, but the number is expected to rise.

The ongoing surge of 8(a) activity is occurring from coast to coast.

In the South Florida region, a normal year witnesses the certification of about 20 new 8(a) companies. This federal fiscal year -- which is half over -- the region is on pace to certify 30, said Ilene Rubio, the assistant district director for the 8(a) business development division in Miami.

"We've been bombarded with phone calls," she said. "It's very active here."

Rubio said the increase began in 2008, and has been accelerating ever since.

"I think a lot of people are looking for ways to improve their businesses and get more opportunities for their businesses," she said. "The president has basically said there will be more dollars for funding."

In California, Alberto Alvarado, the district director of SBA office in Los Angeles, said the inquiries to his office have also risen by 25 percent since October. Alvarado said that while the department doesn't track the reasons behind the trend, it's fairly easy to speculate.

"I believe it is attributable to all these things that are occurring," he said. "On the negative side it's, 'Oh my God I lost my job. I better figure out how to get certified.'" But he speculated that others are looking for stimulus package-derived opportunities.

The increased number of applications coincides with several recent signs that the Small Business Administration is about to grow.

In February, the Obama administration vowed to enhance lending opportunities for small businesses, a practice that is overseen by the SBA. And earlier this week, the House Committee on Small Business recommended that Congress double the budget of the Small Business Administration.

That's not to say it's a free-for-all. Applicants for 8(a) status must undergo a rigorous screening process.

For starters, they must show that they are socially and economically disadvantaged. For members of some ethnic groups -- Hispanics, blacks, Native Americans and Asian-Pacific Americans -- the government assumes social disadvantage. Others -- such as women or people from poor families -- can also apply, but need to prove they are socially disadvantaged.

No applicant, regardless of ethnicity, can have a net worth exceeding $250,000, excluding the equity of his home and business.

For those who earn 8(a) status, the program lasts a maximum of nine years. After four years, the businesses must show that they are becoming independent. Specifically, at least 15 percent of their contracts must be non-8(a)-related. Every year, that percentage must increase, up to 55 percent in their ninth and final year.

By law, the department must process the applications within 90 days.
Loddo said that even with the increased demand, the average processing time for each application has been 72 days since late July, thanks to new software.