EDWOSB CERTIFICATION: This Is What Professionals Do for better business

 The current economic inferiority criteria for EDWOSBs is $750,000; this is greater than the initial qualifying threshold of $250,000 but equal to the continual eligibility obstacle for the 8(a) BD program. When a firm files for both 8(a) BD and EDWOSB status at the same time, it may only be considered economically challenged for EDWOSB purposes. As a result, unnecessary complexity and ambiguity would be present in the application and certification processes. The final regulation makes ensuring that economic disadvantage is consistent across programs to solve this. To assist the Office of Corporate Development in identifying or developing standards for determining what qualifies as "economic disadvantage" for businesses applying to the 8(a) BD program, the Small Business Administration (SBA) commissioned study. The study supports a $375,000 to $1.2 million threshold for economic disadvantage based on the data that is currently available. This range indicates the difficulties in establishing a threshold that considers the ability of disadvantaged business owners to engage in the free market as well as their access to money and credit. The numerous standards for economic disadvantage imposed by various Federal and state programs provide an example of this complexity. The Impoverished Business Enterprise Program (DBE), for instance, has a $1.32 million barrier for economic disadvantage and is run by organizations approved by the US Department of Transportation (DOT). Economic disadvantage ceilings for states with equivalent programs for "black and women commercial firms" range from $1.6 million to $1.6 million. The SBA-commissioned study was unable to determine which standard the Agency ought to use. One possibility is to adopt a personal net worth threshold of $1.1 million "unadjusted" (home and business equity included), which is equal to $375,000 "adjusted" (home and business equity excluded). However, neither the research nor the EDWOSB qualifying process evaluated the differences in economic disadvantage between applying to the 8(a) BD program and remaining in the program after acceptance. 

The SBA considered implementing a $375,000 net worth threshold for both the 8(a) BD and EDWOSB CERTIFICATION programs to remove any ambiguity and contradiction between the two programs. The SBA asked for opinions on whether the $375,000 net worth criterion or the $750,000 net worth criteria should be used for the EDWOSB and 8(a) BD and Programs. Additionally, the SBA received four comments explaining several methods for establishing economic criteria. A flexible standard based on inflation was supported by one, a locality-based standard by another, and a tiered system by two.
A degree of the economic disadvantage of $750,000 was contested in three more submissions. One supported a $1 million price-to-buy threshold, another opposed any such condition, and the third just thought that $750,000 was inadequate. According to the SBA, changing the economic disadvantage criterion based on unpredictable external factors like inflation or using different criteria based on geography would make the application process too unstable and complex and result in program errors. The proposed regulation does not include raising the threshold for economic disadvantage to $1 million or removing economic disadvantage requirements, and neither is it being taken into consideration right now. SBA is keeping the EDWOSB CERTIFICATION economic disadvantage threshold and appropriately revising the 8(a) BD economic disadvantage criteria in light of the study's finding that SBA may set an economic disadvantage level between $375,000 and $1.2 million, stakeholders' unwavering support for a $750,000 economic disadvantage barrier, and the preference for consistent standards across programs.

 

 

The SBA also asked for input on potential future metrics for gauging economic disadvantage. Commenters explicitly asked whether there is a difference between the EDWOSB and the 8(a) BD rules regulating how retirement funds are considered when measuring an economically disadvantaged individual's net worth and if the change in the economic disadvantage threshold would modify that calculation. As a result of this feedback, the SBA amended sections 124.104(c)(2)(ii) and 127.203(b)(3) of the final rule to specify that retirement savings would henceforth be excluded from calculations of a person's net worth who is economically disadvantaged, regardless of age. SBA has already thought about this change and has concluded that it is compatible with the ideal public goal of promoting retirement savings rather than punishing it. Additionally, retirement-age small company owners are no longer only disqualified from membership in EDWOSB and 8(a) BD because of their retirement savings. The SBA's long-term objective of maintaining regulatory consistency and continuity is advanced by promptly altering the EDWOSB CERTIFICATION and 8(a) BD net worth requirements as well as the economic disadvantage standards for both programs.
These contracts are for sectors where there is a dearth of women-owned small businesses. Additionally, certain contracts are only available to economically disadvantaged women-owned small enterprises (EDWOSBs). The process for WOSB/EDWOSB certification has changed. Self-certification with the SBA is no anymore an option for businesses. Future WOSB/EDWOSB certification applicants must go through the SBA's more involved procedure. More qualifying small firms can now take part in the program due to the amended limitations.