Friday, July 29, 2016

SBA Expands its Mentor-Protege Program

The U.S. Small Business Administration (SBA) amended its regulations last week to implement provisions of the Small Business Jobs Act of 2010 (takes awhile to go from statute to regulation, it seems) and the 2013 NDAA (National Defense Authorization Act). The new rule establishes a Government-wide mentor-protege program for all small business concerns, similar to the SBA's own mentor-protege program for participants in SBA's 8(a) business development program.

The 2010 Jobs Act was designed to protect the interests of small businesses and increase opportunities in the Federal marketplace. Congress recognized that mentor-protege programs serve an important business development function for small business and authorized SBA to establish separate mentor-protege programs for service disabled veterans, HUBZones, and women-owned small businesses.

The 2013 NDAA authorized SBA to establish a mentor-protege program for all small business concerns. This section provided that small business mentor-protege programs must be identical to the 8(a) mentor-protege program, with a few exceptions. It also prohibits individual agencies from setting up their own mentor-protege programs unless the SBA approves.

The regulations themselves are quite voluminous. You can read them here. One of the provisions allows any small business to form a joint venture with any larger, for-profit mentor business that is in sound financial condition thereby giving them access to advice and assistance, while, at the same time, maintain their eligibility for federal small-business set-aside contracts.

Some have asked the benefits of the program to the mentor. There are a few. Mentors can enter into joint-venture arrangements with proteges to compete for, and perform on, certain federal government contracts that wouldn't have been open to them as a stand-alone firm. Also, mentors can own up to 40 percent of the protege to help it raise capital.

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