Decision Letter

Mike Jones

June 6, 2017 First Name Last Name, President
Company, Inc.
Street Address
City, State 00000

Dear Ms. Business Owner:

This letter is to inform you that the U.S. Small Business Administration (SBA) has completed a thorough review of the information you submitted for admission to the 8(a) Business Development (BD) program and that your request, unfortunately, is denied.

If you need assistance with resubmitting your 8(a) application, there are valuable resources available to help you at no cost. Please refer to the section "Resource Available" within this letter. If you have questions regarding this letter, the reconsideration process, or would like to set up a conference call with the SBA Business Opportunity Specialist and Area Manager, please contact the Philadelphia Division of Program Certification and Eligibility at (610) 382-3989.

To help you better understand the reason(s) for this decision as well as possible next steps including resources available to help you resubmit your application, please refer to the information outlined below.

Reason(s) for Decision:

It has been determined that you, the individual upon whom eligibility is based, are not economically disadvantaged as required under Title 13 of the Code of Federal Regulations (C.F.R.) § 124.104.

Economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities, as compared to others in the same line of business and competitive market who are not socially disadvantaged. SBA will examine factors relating to the personal financial condition of any individual claiming disadvantaged status, including income for the past three years (including bonuses and the value of company stock received in lieu of cash), personal net worth (excluding ownership interest in the applicant or Participant, equity in the primary personal residence, and unavailable retirement account funds), and the fair market value of all assets, whether encumbered or not. An individual who has average personal income exceeding $250,000, personal net worth exceeding $250,000 and/or total assets exceeding $4.0 million will generally be deemed to have access to credit and capital and not economically disadvantaged.

In this regard, your adjusted personal net worth exceeds the regulatory $250,000 limit based on the figures you have presented on your SBA Form 413, "Personal Financial Statement" dated December 2, 2016 and a required adjustment to one of the line item figures you presented.

SBA included Cash of $3,000, Savings of $2,000, Rental Real Estate you own at $576,000, as part of your net worth. SBA excluded the value of your IRA of $38,473 and the $121,243 equity in the applicant firm per regulation. You also included $30,000 as Other Personal Property which you have not indicated what that refers too. Finally, it appears that you did not include your ownership interest in Maye Louise Corp, which needed to be included into your net worth. This line item as discussed below needed to be adjusted to $74,815.

The $27,000 in Accounts Payable and a Mortgage Loan of $380,000 on your rental property (liabilities) were used to reduce your net worth.

A review of the financial statements for Aaa Corp a firm that you are 100% owner of indicates that the equity that you have in that firm is $74,815. SBA notes that on your SBA form 413 you have not included this firm. Therefore, SBA included this $74,815 to your form 413 as an Other Asset to reflect your ownership interest Aaa Corp.

ASSETS FIRST NAME LAST NAME

Cash on hand & in Banks $3,000.00
Savings Accounts $2,000.00
IRA/Ret. (Unavail) $38,473.00
IRA or Other Retirement Account
Accounts & Notes Receivable
Life Ins.- Cash Surrender Value
Stocks and Bonds
Real Estate- Primary res
Other Real Estate $ 576,000.00
Auto- Present Value
Other Personal Prop. $30,000.00
Other Assets $74,815.00
Ownership interest in applicant firm $121,243.00

LIABILITIES
Accounts Payable
Notes Payable to Banks & Others
Installment Account Auto
Installment Account Other $27,000.00
Loan on Life Ins. $ 6,000.00
Mortgages on Primary Residence
Mortgages on other Real Property $ 380,000.00
Unpaid Taxes
Other Liabilities
HELOC

Total Asset $845,531.00
Total Liabilities $413,000.00
Actual NW $432,531.00
less Unavail Retirement $38,473.00
less 8(a) ownership interest $121,243.00
less eq. in primary residence $0
NET WORTH FOR 8(a) PURPOSES $272,815.00

Once all of the above adjustments were made, SBA computed your adjusted net worth at $272,815 which exceeds the regulatory $250,000 limit.

Based on the above, we conclude that you, the individuals upon whom eligibility is based, do not meet the economic disadvantage requirements of the program.

Steps for Reconsideration:

Please review the Reconsideration section that has been added to your 8(a) Initial Application on Certify.SBA.gov. for the information you will need to provide in order to be reconsiderable. This must be completed with 45 days of the date of receipt of this letter. That date is November 25th, 2017.

Should you decide to appeal this decision directly to SBA’s Office of Hearings and Appeals (OHA) without taking advantage of your right to request reconsideration, your petition must be filed with OHA in accordance with the requirements set forth in 13 CFR Part 134 and §124.206 and must be filed by e-mail, mail (any service provided by the U.S. Postal Service), delivery, or facsimile within forty-five (45) days of the date of receipt of this letter. Go to >http://www.ecfr.gov< to retrieve the current requirements set forth in 13 CFR Part 134 and §124.206.

Date of filing is the date the submission is received at OHA. Any submission received at OHA after 5:00 p.m. eastern time is considered filed as of the next business day 13 CFR §134.204(b)(2).

Petition must contain the following: (1) the basis of OHA’s jurisdiction; (2) a copy of the SBA determination being appealed and date received; (3) a clear and concise statement of the factual basis of the case and applicable legal arguments; (4) the relief being sought; (5) the name, address, telephone number, facsimile number, e-mail address, and signature of the petitioner or its attorney; and (6) a certificate of service in accordance with §§134.204(d) and 134.203. Petition must also state the reasons why the determination is alleged to be arbitrary, capricious or contrary to law and should include specific references to the determination and the record supporting the determination. 13 CFR §134.402.

Please note that failure to submit your request for reconsideration, along with the supporting documentation to overcome the above reason for decline, or failure to appeal this finding within the prescribed period will prevent further consideration of your firm’s application. Should this happen, or should your appeal to the Office of Hearings and Appeals be unsuccessful, you will have to wait 12 months from the date of the final Agency decision before you can reapply. A decision to request reconsideration at this time does not preclude you from exercising your right to appeal if your firm’s application is declined after reconsideration.

Resource Available:

One resource that you can utilize today is your local SBA District Office. Your district office is:

SBA New York District Office
26 Federal Plaza
Suite 3100
New York, NY 10278
PH: 212-264-1318

Office of the National Ombudsman:

You also have the right under the Small Business Regulatory Enforcement Fairness Act to file a complaint or comment with SBA’s National Ombudsman at:

Office of the National Ombudsman
U.S. Small Business Administration
409 Third Street SW
Washington, DC 20416
PH: 1-888-734-3247
FX: 1-202-481-5719
EM: ombudsman@sba.gov

The right to file a complaint or comment with SBA’s National Ombudsman is independent of any other rights you may have to contest this decision. The National Ombudsman may not change, stop, or delay a Federal agency’s enforcement action or impede any administrative or criminal process.

Thank you for your interest in applying for participation in the 8(a) BD program.

Sincerely,
Ajoy K. Sinha
Acting Associate Administrator
Office of Business Development