SBA proposes opening 8(a) program to white-owned businesses
Gettyimages.com/ Neal McNeil
By
Nick Wakeman
The Small Business Administration wants to eliminate race-based eligibility presumptions and create a new social disadvantage test for applicants.
A proposed rule by the Small Business Administration would fundamentally rework the 8(a) program by eliminating race-based eligibility presumptions for minority business owners and opening the door for white-owned firms to enter the program.
The proposed rule unveiled Thursday makes four distinct changes to the 8(a) program, including removing race and ethnicity-based presumption from the regulations.
The rule creates a new test for social disadvantage in which any individual — including white citizens — can qualify by showing that during their lifetime, a government agency, university, or corporation discriminated against their racial, ethnic, or cultural group, or favored a group of which they are not a member, and that the action caused them material harm.
SBA's proposed rule also includes white Americans as potential 8(a) applicants. Current rules exclude white Americans from participating.
The proposed rule would allow white Americans to highlight DEI programs, affirmative action policies, race-based quotas, and admissions discrimination as evidence of social disadvantage.
After the Ultima Services Corp. v. Agriculture court case, SBA stopped using the so-called rebuttable presumption to automatically qualify individuals from certain designated groups for the 8(a) program. SBA shifted to a non-presumptive standard, requiring individuals to submit a personal narrative describing how they had been discriminated against.
The proposed rule would replace the narrative with a self-certification plus evidence process. That evidence can include government or corporate policies, court decisions, website material, or administrative rulings.
In theory, applicants could use the SBA policies that the proposed rule eliminates as evidence of discrimination.
The proposed rule does not affect entity-owned firms. Tribes, Alaska Native Corporations, Native Hawaiian Organizations, and Community Development Corporations remain eligible under existing rules.
Comments on the proposed rule are due July 13.