The SBA’s 8(a) Business Development 8(a) BD Mentor-Protégé Program (“Mentor-Protégé Program”) was created to pair up-and-coming protégé companies with established mentor companies. The mentor company is tasked with providing the protégé with education, contracting assistance, and financial support.
By formally matching up newer businesses with successful mentors, the SBA hopes that the successful businesses will share their knowledge and skills with the up-and-comers. According to the SBA, their Mentor-Protégé program serves three actionable business development purposes:
- To build and develop the protégé’s business skills
- To help the protégé meet the goals in their SBA-approved business plan
- To make the protégé competitive in the marketplace, by improving their ability to compete for contracts
The long-range government interest in this program is for each protégé business to achieve independent entrepreneurial success so that in future years, the financially viable businesses will contribute to fortifying our national economy.
What Benefits Will a Protégé Receive?
The ultimate big-picture goal of the Mentor-Protégé Program is to allow small, disadvantaged 8(a) Program participants to grow their businesses so they’ll be competitive in their fields. In order to achieve those goals, protégés under the Mentor-Protégé Program get access to a variety of business development resources.
Mentor businesses provide technical and management assistance to the newer business. That includes hands-on help with designing business operations, meeting the company’s financial needs, managing the supply chain, and more. It’s easier to learn a lot of business and management skills in the field rather than in a classroom and this kind of experience is invaluable.
Protégés in this program are also privy to unique access to federal contract opportunities. For example, many participants enter joint ventures with their mentors. These partnerships may open doors for the protégés to compete for federal government contracts which would otherwise be out of their financial scope, technical ability, and capability.
Protégés may also receive financial assistance in the form of equity or loans. Mentors can own up to 40% of the protégé company, which can help the protégé build capital to grow their business. Funding can be a make-or-break issue for a new business with lean finances, but it’s often hard for new businesses to get loans or investors. This program makes it easier – the mentor companies are more willing to invest because they’ll be involved in the operations of the business and can protect their interests.
How Does the Mentor-Protégé Match Process Work?
Any business can act as a mentor, regardless of prior involvement with the SBA. You can reach out to successful businesses in your area to see if they’re interested in working with you through the program. Each Mentor-Protégé relationship must be formally approved by the SBA. Prior to SBA approval, the prospective mentor and protégé will each draft a written agreement to submit to the SBA’s review panel. The SBA will then review this agreement to determine if it’s favorable for both parties.
The SBA requires that this written agreement outline how the protégé firm will meet the goals of their 8(a) approved business plan, name at least one contact at the mentor firm who will be responsible for the protégé, and require the mentor to commit to a one-year mentorship arrangement.
The SBA will only approve the written agreement if it meets all the specifications set out in the regulations found at 13 CFR 124.520. For more information on the required written agreement, you can find the complete requirements online.
Once the Mentor-Protégé agreement is approved, the SBA conducts an annual review of the sponsored parties to ensure their success.
How Do I Apply to Be a Protégé?
Only currently approved 8(a) firms can apply for the Mentor-Protégé program. In order to qualify, the SBA also requires that the prospective protégé meet certain additional criteria. The application process is detailed and somewhat complicated, so the SBA recommends that each hopeful protégé seek assistance with the process.
Reach out to your local SBA District Office Business Opportunity Specialist to ask questions, receive information, and put together your application information. In additional to online resources, the SBA provides toll free phone numbers to vet questions:
Small Business Answer Desk: 1-800-8-ASK-SBA
For the hearing impaired, the TDD number: (202) 205-7333
What Are the Application Requirements?
At a minimum, each prospective protégé business must meet these requirements:
- Be a member of the 8(a) BD Program
- Be in good standing with SBA Program requirements
- Be current with all SBA reporting requirements
In addition to being a current 8(a) member in good standing, the prospective protégé business must also meet at least one of the following conditions:
- Be in the developmental stage of the 8(a) BD Program
- Have never received an 8(a) contract
- Be less than half the size of the small business size standard corresponding itsprimary NAICS code
For a more detailed look at the requirements, check out SBA regulation 13 CFR 124.520.
The Bottom Line
It’s tough to get started in business and it can make a world of difference to have an experienced mentor in your corner. They’ve been through the process before and they can help you avoid pitfalls and take advantage of opportunities. It’s like having an older sibling for your business – someone to look out for you.