The SBA has recently revised the criteria for determining economic disadvantage in the 8(a) Business Development Program. This update reflects changes in inflation. In 2020, the SBA established a standard definition for both the 8(a) program and the economically disadvantaged women-owned small business program. They decided to adjust the economic disadvantage thresholds based on the GDP price index, which measures inflation. As a result, the adjustment for 2022 increased the limits by approximately 11.86 percent.

This adjustment raised the net worth requirement for the 8(a) program, stipulating that individuals must have a net worth of less than $750 thousand which translates to $838,942. The SBA then rounds this figure to $850 thousand.

The second change pertains to an individual’s Aggregate Gross Income (AGI). Currently, the SBA assumes that an individual is not economically disadvantaged if their adjusted gross income (AGI) averaged over the three preceding years exceeds $350 thousand. This policy was implemented in 2020. Since then, inflation, as measured by the change in the GDP price index, has risen by 11.86 percent. Adjusting the $350 thousand threshold by this inflation rate would result in $391,506, which is then rounded to $400 thousand.

The third change pertains to total assets. Currently, an individual is deemed not economically disadvantaged if the fair market value of all their assets, including their primary residence and the value of the applicant firm, exceeds $6 Million. This threshold was established in 2020. Applying the same inflation adjustment of 11.86 percent results in a new amount of $6,711,534, which is rounded to $6.5 Million.

These adjustments to the SBA’s criteria for determining economic disadvantage in the 8(a) Business Development Program are significant, as they may now open doors for individuals who previously exceeded the thresholds and felt excluded from the program. By increasing the limits to account for inflation—including the net worth cap of $850 thousand the AGI threshold of $400 thousand and the total assets cap of $6.5 Million—many may find that they qualify for support and resources that can help their businesses thrive.

If you have questions, or would like to determine your eligibility for the 8(a) program, I always recommend you contact an industry expert such as ez8a or Advance 8a. Their teams are here to help you navigate the process and ensure you understand how these new thresholds may apply to your situation. Neither charge for an initial consultation.