What exactly is the SBA and how can they help you? In this episode, we connect with Levi Kinnard from the US Small Business Administration to talk about the many different federal certification programs that are available to small business owners.
Joseph: Welcome back listeners. Thank you for tuning in to B2U podcast brought to you by cbrbiz.com. Our goal is to bring you business resources directly to you. Once again, I’m your host Joseph and joining me in the studio today is Levi Kinnard from the US Small Business Administration. Hey, Levi. Thanks for joining us today.
Levi: Thanks for having me, Joe. I appreciate it.
Joseph: Let’s start off by learning a little bit more about you and what you do for the SBA.
Levi: So, I’m an economic development specialist. I work for the Small Business Administration here in North Carolina. Our principal office is in Charlotte, though we have two senior managers up in Raleigh and one in Wilmington. We formerly had one in Asheville, but that is a vacant position right now. My main job is to take the message of SBA’s programs and services directly to the small businesses that can benefit from them.
Joseph: Okay. And so are there offices all over North Carolina or just here in Charlotte?
Levi: So, we are a national organization. We cover the span of the entire continental United States, Puerto Rico, Hawaii. No matter where you go, there will be an SBA office that services you.
Joseph: That’s great. That’s definitely a big help for our small business owners. So I guess in a nutshell actually, that jives with our next question, how does the SBA help small business owners and what type of programs do they offer?
Levi: So, we can we focus on three predominant areas. The first one is counseling. So you may have a small business that has an idea, something that they do very well. So what we do is we try to give them the knowledge, the business acumen, to build a business infrastructure around that idea so that they can take it to market, scale it, and be successful with their idea. So counseling is a big part of what we do.
We do that through our resource partners. We fund the SCORE organizations, which is a retired executive core. What they do is they’re industrial experts. So what they can do is tell you exactly how to navigate around specific industrial problems that you might run into with your business. We also fund the Small Business Development Centers. They’re more functional experts. So what they do is they help take a business infrastructure.
They take it apart, put it into components, optimize those components, put it back together, streamline operations so that you have a very efficient running business. We also have Women Business Centers and Veteran Business Outreach Centers. We have these throughout the United States. No matter where you go, you’re going to be able to be counseled business wise.
Joseph: Those are some great programs. So a lot of our listeners are familiar with certifications available for a local government. One of the big things we wanted to talk about was federal certification programs where the federal level. Does the SBA offer some of those sort of things?
Levi: Absolutely. So how we got here today is I was talking with the Economic Development Department with the City of Charlotte. And they were telling me some of their socially economic disadvantaged programs that they’re running that give a specialized contract into certain types of businesses. The federal government does the exact same thing. We have four. We have the 8(a), which is you have to be socially and economically disadvantaged, the HUBZone, the Women-Owned Small Business, and Service-Disabled Veteran and Small Businesses.
Now, what I need to clarify at this point is that these are programs that stimulate businesses through government contracting. If you’re not in government contracting, then these certifications are not going to do much for you. You can put the logos on your car. And you can say that you’re one of these, but it’s not going to give you direct benefit.
Joseph: Okay, that makes sense. So you mentioned HUBZone. What is that program and how would someone be eligible for that?
Levi: You know, HUBZone I think has a particular significance to Charlotte because there so many around the city. I took a look at the map this morning before I came here. If you look, if you think of Charlotte as, like, a head, the HUBZones kind of wrap around it sort of like a crown. So the queen city and things like this. But if you start a business in one of these areas, they’re going to benefit you in three ways. If it’s a foreign open competition and government contract, then you’re going to get a 10% price preference, which is hugely important.
Joseph: Yeah, 10%? I’ll take 10%.
Levi: Exactly. So you can bid those contracts with a little bit more meat on the bones than any of your other competitors, like the big businesses. Another one is there’s just a set aside, which means that only HUBZone businesses can bid on that contract. So you may go from 1,000 big businesses, small businesses, all different types of businesses with 1,000 different companies submitting proposals. There may be 10 HUBZone businesses in the city that can bid on it. So you go from a 1 in 1,000 chance of getting that contract to 1 in 10.
Joseph: I like those odds.
Levi: So, really isn’t that great or there’s just straight sole source. The government agency sees a HUBZone business that they like. They need to meet their goals, which we’re going to discuss here in a minute. And they haven’t done very well on the HUBZone area that year. And they decide, you know what? We can give that contract to that HUBZone business. Just a side note, real quick if you don’t mind.
So, federal government procures around $500 billion to $600 billion dollars in goods and services every year. It’s the largest purchaser of goods and services in the entire world. Of that amount of money, there has to be 23% purchased from small businesses. And the way this is broken down is for 23%, you have 3% for HUBZones. So, 3% of that, possibly $600 billion, has to go to HUBZone companies. You have 5% for Women-Owned Small Business and 8(a) and then you have 3% for the Service-Disabled Veteran-Owned Small Businesses. So the government agencies have to hit that number every year or else the administrator of the SBA goes to Capitol Hill and advocates for small businesses so that the government agencies do their job and give 23% to them.
Joseph: That makes sense. So, 3% for HUBZone, you said, right?
Levi: Yes, 3%, which is a pretty sizable number.
Joseph: Yeah, 3% of $600 or $6 billion. I’ll take the odds on that. So you also mentioned 8(a) business development programs. How is that different from HUBZone?
Levi: Okay, okay, so 8(a), it’s probably my favorite program. I consider it the crown jewel of federal contracting programs or you could term it probably the greatest contracting mechanism ever devised by man. I just came from San Diego. I was there for the last three years. We only have 110 8(a) firms in that city, okay?
Joseph: San Diego is pretty big.
Levi: Yeah, it’s a huge business community. Yet there only a 110 8(a) qualified firms. We did $950 million in contracting with 110 firms. Here in North Carolina, we did almost $600 million in just 70 firms. So that’ll give you an idea of just the scale of contracting dollars being poured into that, those types of companies. Now, to qualify for an 8(a) company, you have to be socially disadvantaged, okay?
And you have to be economically disadvantaged. I’m not going to go into the specifics of that, but 13 CFR 124.103 will let you know if you’re socially disadvantaged or you have a factor about you that’s beyond your control that’s giving you a depressed ability to compete in the economy. And you have to have a net worth below $250,000. And the only other one is you have to be in business for two years.
Joseph: That’s not bad.
Levi: It’s only three factors.
Joseph: It sounds pretty obtainable.
Levi: Very obtainable. Now, it’s sort of a difficult application process, but we also have a league of counselors that are going to help you get through that.
Joseph: So, before we jump to the next group, which was the Women-Owned Small Business Program, what type of contracts are these that are being handed out or not handed out, or not handed out, earned.
Levi: Yeah. Yes. Well, I can say from my experience and what I see that you have a lot in construction. You may have the general construction where they’re building buildings. You may have facility maintenance. That could be anything from concrete, electrical, lawn care, janitorial, anything that has to do with government buildings, which there’s a lot of. You can have IT contracts. You can have really, they buy anything from ink pens to the chairs that you’re sitting in. The same as just like this building, you know, from top to bottom, they buy.
Joseph: That’s makes sense. So, the last program that was mentioned was the Women-Owned Small Business Program. How does this program help female entrepreneurs grow their business?
Levi: Well, this is definitely a demographic business that’s grown in prominence. And there’s a lot of women coming to the table now. And what the SBA is trying to do is provide them a contracting mechanism that gives them an ability to compete in industries in which they’ve had a depressed ability to compete in the past. So, one of the factors that you have to have to become a Women-Owned Small Business is you have to be…your NAICS code, North American Industry Classification code, which is how the government tracks different industries like health industry or anything like that. Well, there’s a list of those NAICS codes that they have determined that women have had a depressed ability to compete.
Now there’s two programs within the Women-Owned Small Business. There’s just straight Women-Owned Small Business, which means there is no income restriction on this. You could be a billionaire and own a Women-Owned Small Business and compete and get set-asides and get sole sources or you could be an economically, an EDWSB or economically disadvantaged WOSB, which means that you cannot have more than a net worth of $750,000. But if your NAICS code is found on those lists, then you qualify for set-asides and sole sources from the federal government.
Joseph: Now $750,000, that’s a pretty wide gap.
Levi: It really is. And not only that, but they just had for the 8(a), which remember was $250,000.
Levi: They’re going to take out the value of your qualified retirement accounts, your 401Ks, your IRAs. They are not going to penalize you for having retirement. We’re going to take out the equity of your primary residence. They’re not going to punish you for having a house. They’re not going to take out the equity in your business. They’re not going to penalize you for having a successful business. So after all of those have been taken out, then you can’t have more than $750,000. So it’s very attainable.
Joseph: Yes, that’s totally fair, I would say. It definitely levels the playing field. So, these definitely sound like some great opportunities for small business owners to get access to these federal contracts. How can they learn more about the programs or get started with the certification process?
Levi: So you can always come into our local office. You know, we’re in SouthPark. You go to sba.gov. You go to local assistance. You can find our direct location. You can find out the location, of all of our resource partners. They’re all well-versed in these programs. You can reach out to me directly. My phone number is 704-344-6585 or my email is email@example.com. We’re more than willing to walk you through any of these programs that you have through.
One last thing that I wanted to mention that was our women program there. I hope that maybe you guys would have you back as a guest so I can discuss that. It’s probably one of the most important programs in the small business economy. Just last year in North Carolina alone, we guaranteed $850 million dollars in small business loans. We guarantee 85% up to $150,000 and 75% up to $5 million. So this mitigates the risks for banks substantially. And that’s what’s helping really stimulate the small business economy with loans. So that’s another thing that we do and that we’re very proud about.
Joseph: Nice. Well, this has definitely been insightful. You’ve got my gears turning. I’m trying to think how can I get a small contract, start a small business and get a federal contract because this is very interesting. But, once again, I appreciate all your time. Is there any other last leaving thoughts that you would like to leave for our listeners?
Levi: Really utilize these resources because, you know, they say that the SBA is the best-kept secret in the federal government. And I really think that’s probably the case. Not a lot of people know what we do. I’ve owned two businesses before. I did not really know what the SBA did. If I had, I probably would have been more successful just because of the counseling, the loans, and the government contracting. So, reach out to us. We love hearing from people. And the more people that we help, that’s job security, isn’t it?
Joseph: Yes, it is.
Levi: Would you mind if I talked about our last federal contracting program? It’s the Service-Disabled Veteran-Owned Small Business Program. And I think it’s gaining prominence right now. And I know there’s a veteran community here in North Carolina that would love to hear about it.
Joseph: Oh yes, definitely.
Levi: So, there’s actually two. So I need to talk about the one for general government, and then the one specific to VA. So the one that’s general to government, we can only do…they only try to do 3%. Now, it’s a self-certification through the SAM or the System Award Management registration process. You click the box, say you’re a veteran. You click the box say, you’re service-disabled. You’re ready to bid Service-Disabled Veteran-Owned Small Business contracts. They do hit this goal every year. They’re trying to increase it every year, but the one agency that’s doing a great job is the VA.
Now, remember the VA is one of the largest government agencies out there. And they have what’s called the Veterans First Program, which has probably the greatest teeth in government contracting out there for the federal acquisition regulations. If two or more reasonable offers come in for Service-Disabled Veteran-Owned Small Businesses, they must set that contract aside. Using that program right now, the VA is doing 35% of their contracting.
Remember, this is one of the largest government agencies out there, 35% of the Service-Disabled Veteran-Owned Small Business community. So, it’s a very, very important program that we’ve got going. Veterans tend to love it because they get put at the front of the table in VA contracting. And because of a core case kingdom where soon that will be coming down to general government. And that’s really going to get the veterans and all other government contracting mobilized and going.
Joseph: Now, are there any income restrictions now like for the, 8(a), HUBZone, and other programs?
Levi: Not at all. That’s what’s great about this program is that once you get in, you’re in for life. It’s sort of like the Women-Owned Small Business. You get in, you’re in for life. 8(a) is the only one with a time restriction. That’s how you know it’s probably the best one is because you can only be in there for nine years. It’s a defined nine-year program. After that, you’ll never be an 8(a) company again.
Joseph: Nine years is a fair run though.
Levi: Ask the guys that are graduating now.
Joseph: No, that sucks. So how if I wanted to start a small business, even though I’m not already a small business owner and I’m thinking about trying to obtain a federal government contract, how do I, what type of business could I start? Could I sell pens to the government, paper supplies, anything of that nature?
Levi: So, yeah, all of those things are procured by the government. What I would suggest first doing is if government contracting is going to be a specific focus of your business, the DOD funds, what’s called the Procurement Technical Assistance Centers, now they’re are co-located with our Small Business Technical Development Centers. And they’re all throughout the state. I think there’s 10 of them throughout the state. There’s one here in Charlotte. Go in there and have them…tell them the idea that you have. What they’re going to do is they’re going to turn that idea into a NAICS code so that they can track it. And then they’re going to go to the federal procurement data system and see how much of it the government is actually purchasing and which agencies are purchasing it.
So you can kind of develop your marketing plan right off the bat. If it’s that NAICS code is not found and the governments not really procuring a lot of it, it may not be a great pursuit of your business. But in a lot of industries, it is. And they procure everything, like I said, from ink pens to building buildings. Now there is one thing that I need…One caveat here. The government procures things in two different ways. Now, have you ever seen the movie War Dogs?
Levi: Okay, love that film, right?
Levi: So you got two 26-year-olds have pulled down a $350 million contract. Business opportunities, fbo.gov. Federal business opportunities .gov.
Joseph: I’m writing that down right now.
Levi: Really check it out because it has every active government contract, federal government contract, in the nation published by law. You can go in there and see what contracts are out there. You can see, if what you’re thinking… if you can do any of them, it will be there. Now the other way that the government procures things is through the GSA schedule. Now, these are more standardized items. So you would say, like, the ink pens for instance. So because there’s no real differentiation, they can kind of…they standardize it.
So, you know, Walmart, Staples, all the other kind of middleman, they’ll have markets on the GSA schedule. So you would have to get a GSA schedule to procure or put yourself in the position for government agencies to procure your goods and services. But on the FBO, those are less standardized products, for instance, like construction. They may want to dig a tunnel. You may have a backhoe, kind of commissioning your backhoe to go out there and do that type of work.
Joseph: Okay. So yeah, before I order, like, a million things and have them stuck in my apartment, I just wanted to make sure. Another question for you. Do they forecast contracts or do they have active contracts posted or anything like that?
Levi: Most agencies will have forecasting data. And every year, they’re going to put out because they want small businesses to kind of have some perspective view of what they’re going to be doing because, remember, to compete on a government contract, you’re competing with a proposal. So, the proposal process is usually this. On the FBO, you’re going to go on there. They’re going to put out sources sought. They want to see what types of businesses are going to be bidding on this contract. This is where the contracting officer can kind of decide what category he wants to procure from.
So, if a lot of small businesses can provide on this contract, he may set it aside for small business. 8(a), for 8(a), Woman-Owned Small Business. If he needs to make his goals and any of those categories this is how he’s going to set it aside. So you always want to get in there and put yourself on that interested parties list.
Then, a pre-solicitation comes out, which lets your company know that in about a month you’re going to have…there is a solicitation that’s going to come out. And you’re going to have to write a proposal for it. When that solicitation hits the street, you’ve got about a month to three months to put that proposal together and bid on that contract. So, that’s pretty much the process of government contracting.
Joseph: Okay. And so do the coaches that are at the SBA, can they help you write these proposals?
Levi: What they’ll do is they’ll give you guidance on how to show that… there’s three areas that proposals are gauged upon. One is your past performance. Have you done it before? Your technical capability, can you do it? And then, how much is it going to cost the government for you to do it? So, can you do it? Have you done it before? And how much is it going to cost the government to do it? So, the first two factors, technical capability, and past performance, there are no-go, no-go kind of things. They are, yes, you got them or no, you don’t. Then it comes down to price. Price is going to determine where on what stack you’re going to be if they’re going to choose you to do that contract.
Joseph: And so being a Women-Owned Small Business, a HUBZone, and veteran or military certification will help you get these contracts a little bit better.
Levi: Absolutely. Let me give you a scenario. You’re a contracting officer, okay? So you can go through the full contracting gamut, which means you’re getting, information from the technical experts. You’re putting together a statement of work. You’re putting together the solicitation. You’re publicizing it, getting all the proposals, then evaluating all the proposals and then boiling it down. Then it’s probably going to get protested or you can go with one of these socially, economically disadvantaged classifications like 8(a), make a phone call over to the 8(a) office. “Hey, can I give your company a contract that’s $4 million and below?” Then you call up the company and say,” Hey, would you like a $4 million contract?”
Levi: Most of the times people say yes. And then we send back an acceptance letter and it’s done. So that’s why the contracting officers love the 8(a) program because they can get so many contracting dollars out the door with the least amount of the work. Wouldn’t you use it if you could?
Joseph: The path of least resistance. That makes sense.
Levi: Absolutely. We’re like water.
Joseph: All right. Listeners, that concludes today’s episode about federal certifications with SBA. Once again, I’m your host Joseph Smith. And thank you again for tuning into the B2U podcast, brought to you by cbrbiz.com. If you have any questions about today’s podcast, feel free to tweet us at @CBRbiz. And until next time, we mean business.
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