Legal Bulletins

What new and pending applicants should know after September 10.

Beginning September 10, 2026, new and pending applicants for the Small Business Administration’s 8(a) Business Development Program will face a different test for establishing social disadvantage. Applicants may no longer rely on a racial or ethnic presumption or the individualized personal narratives used since 2023. Instead, eligibility will depend on evidence of group-based discrimination and its effect on the individual business owner.

What Changed?

The new rule follows the 2023 federal court decision in Ultima Services Corp. v. USDA, which barred SBA from presuming that members of certain racial and ethnic groups are socially disadvantaged. SBA responded by requiring applicants to submit individualized narratives. Its final rule now replaces both approaches with a two-part evidence-and-certification test open to all individual U.S. citizens, regardless of background.

The change does not end the 8(a) Program or reduce the contracting opportunities available through it. It changes what an individual owner must prove to enter the Program. 

The New Test

First, the applicant must provide objective evidence that a government or private entity in the United States discriminated against a clearly identifiable racial, ethnic, or cultural group to which the owner belongs, or favored another group over it. The evidence may include laws, policies, official statements, government or corporate reports, audits, court decisions, administrative rulings, or congressional findings.

Second, the owner must certify that the owner belonged to the affected group at the relevant time and suffered material harm as a result. Material harm means a loss of access to, or diminished opportunity for, economic advancement. The applicant therefore must connect the documented barrier to an actual effect on the owner, such as diminished access to credit, employment, education, contracting, or another meaningful economic opportunity.

Identity alone will not be enough. General evidence of historical discrimination also will not be enough without a clear explanation of how the identified practice affected the applicant-owner. The strongest applications will present a clear chain of proof: (i) the affected group, (ii) the discriminatory practice, (iii) reliable evidence of that practice, (iv) the owner’s membership in the group, and (v) the resulting economic harm.  

Who Is Affected?

The rule applies to individually owned businesses that submit an application on or after September 10, 2026, as well as applications still pending on that date.

Current 8(a) participants will not have to reestablish social disadvantage solely because of the rule, although they remain subject to the Program’s continuing eligibility requirements. The new test also does not apply to entity-owned businesses, including firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations, or Community Development Corporations. Those businesses remain subject to their existing statutory frameworks.  

What the Rule Means in Practice

The new standard may broaden the range of owners who can establish social disadvantage. SBA’s discussion of the rule includes discrimination based on sex and gives examples involving historical restrictions on women’s access to credit and barriers affecting people with disabilities.
At the same time, the new standard requires a more structured and documented showing. Every applicant must support the claimed group-based barrier and connect it to the owner’s own economic experience.

Proving social disadvantage also remains only one part of 8(a) eligibility. Applicants still must satisfy the Program’s requirements concerning small-business status, ownership, control, economic disadvantage, character, and potential for success. A persuasive discrimination record will not cure a problem elsewhere in the application.

What Businesses Should Do Now

New and pending applicants should review their files now. Each applicant should identify the relevant group and discriminatory practice, collect objective support, and describe the economic opportunity the owner lost or received on less favorable terms. The certification should also be checked against prior government filings, loan applications, tax records, resumes, and other statements for consistency.

The rule also matters to teaming partners, investors, and potential buyers. An 8(a) certification can be central to a company’s contracting pipeline, joint-venture strategy, or valuation. Parties relying on anticipated 8(a) status should confirm whether the company is already admitted or merely has an application pending and allocate the risk of delay or denial accordingly.

The Bottom Line

Entry into the 8(a) Program is becoming an evidence question rather than a demographic assumption. Applicants should treat the new certification as a factual submission to the federal government: concise, supported, internally consistent, and prepared to withstand scrutiny.

A careful review now may prevent eligibility questions from becoming contracting problems later.

For more information on the SBA’s New 8(a) Rule, contact Julian A. Haffner or our Business Law group.

Julian A. Haffner
410-576-4021 • jhaffner@gfrlaw.com