Update: SBA Issues 8(a) Program Term Extension Rule

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SBA has issued its rule allowing for an extension of 8(a) program terms by one year, as directed by Congress. The rule will be effective immediately on January 13 (barring some publication delay). Read on for the key terms from the new rule.

Here are the key highlights from the extension rule:

  • Eligibility. All firms that were in the 8(a) program on March 13, 2020 through September 9, 2020 are eligible for the extension. Firms that were terminated, early graduated, or voluntarily withdrew during this period are not eligible.
  • Automatic Extension. Firms currently in the 8(a) program as of January 13, 2021 will get an automatic extension unless they decline.
  • Graduated Firms. Firms that were participating in the 8(a) program as of March 13, 2020, but then graduated or otherwise left the program before January 13, 2021 can be readmitted, but notify SBA within 60 days of January 13, 2021 and meet the 8(a) eligibility requirements.
  • Transitional Stage Addition. SBA stated that “any period of extension under the Act will be added to a Participant’s transitional stage of participation in the 8(a) BD program” because it would be difficult to put a firm back in the development stage after already being in the transitional stage.
  • Business Activity Target. The business activity target for the extension will remain at 50 percent non-8(a) business.

As SBA noted, Congress did not clarify what it meant when it authorized an extension for firms participating in the 8(a) program “on or before September 9, 2020.” Because the extension was designed to help firms impacted by the pandemic, SBA has limited the timing on this extension to firms that were participating as of March 13, 2020, the date of the pandemic disaster declaration. “This extension authority does not extend to business concerns that graduated from or otherwise left the 8(a) BD program prior to March 13, 2020, or to business concerns that were admitted to the 8(a) BD program after September 9, 2020.”

The 8(a) term extension should be a great help to many 8(a) companies, so kudos to Congress for enacting it and SBA for preparing the rules in a timely manner.

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