My firm is a big supporter of the National 8(a) Association and a proud sponsor of its Winter Conference, which is taking place right now in Orlando, Florida. I just left a presentation given by the SBA and several other SBA experts and found out that the SBA will finally issue its new proposed regulations governing the Mentor-Protege Program.
The proposed regulations follow the Jobs Act of 2010 and the National Defense Authorization Act of 2013, where Congress asked the SBA to expand the Program to firms other than 8(a) companies. There has been much speculation over the last several years regarding what this overhaul would look like. Well, we’re about to find out. Here are some highlights that I learned today:
First, the SBA is going to create two distinct and different Mentor-Protege Programs, one for 8(a) companies and one for other small businesses. The one designed for other small businesses will be geared to servicing SDVOSBs, HUBZone companies, WOSBs and small businesses, generally. Mentors will still have to demonstrate good financial health, among other things, to qualify as a mentor, but there were indications during today’s presentation that the new regulations would better define the meaning of “good financial health.” For Protégés, it appears as if the proposed regulations will make it easier to qualify. If you are a participant in any of the small business programs covered by the proposed regulation, you can be a protege.
The most important aspect to the proposed rule may be the following: all companies who become Mentor and Protege through the revamped program will be able to take advantage of the exclusion from affiliation. Many speculated that this exclusion might remain with the 8(a) Mentor-Protege Program and not extend to those newly covered by the revised regulations. That does not appear to be the case. All companies will benefit from the exclusion.
There are many more changes coming as part of the proposed rules. Once they are issued on Thursday, we will share our thoughts with you.
