8(a) control by disadvantaged individuals

Ownership and control are different tests

A common mistake is to think that holding 51 percent of the shares answers the eligibility question. Section 124.105 asks about ownership. Section 124.106 asks a separate question: who actually runs the business? SBA says control includes both the strategic policy setting done by a board of directors and the day-to-day management and administration of operations. The firm's management and daily operations must be conducted by one or more disadvantaged individuals, with different rules for firms owned by Tribes, Alaska Native Corporations, Native Hawaiian Organizations and community development corporations. This page uses the eCFR text, current as of October 29, 2026.

Experience is judged flexibly. The managers need managerial experience of the extent and complexity needed to run the concern, but it need not be in the same industry as the firm's primary classification. A disadvantaged manager also does not need technical expertise or a required license if the manager has ultimate managerial and supervisory control over those who do. The warning in that same paragraph: where a critical license is held by a non-disadvantaged person who has an equity interest in the firm, that person may be found to control it.

Full-time, top-officer management

Paragraph (a) is the heart of the day-to-day test. The firm must be managed on a full-time basis by one or more disadvantaged individuals with the requisite management capabilities. The disadvantaged full-time manager must hold the highest officer position, usually President or Chief Executive Officer, and must be physically located in the United States. The individuals who manage the firm generally must devote full time during normal hours of operation, and the person in the top job may not hold outside employment that prevents the time and attention needed to control management and daily operations.

If the claimed controller works fewer hours than the firm's normal operating hours, SBA assumes the person does not control the firm unless the firm shows ultimate managerial and supervisory control over both long-term decisions and day-to-day management. Anyone who wants outside employment after certification must tell SBA the nature and expected length of the job and show that it will not prevent control. One more line worth remembering: a disadvantaged owner's unexercised right to change control or management does not count as control, however quickly or easily the right could be exercised.

Board control: the deemed cases

For a corporation, paragraph (d) requires disadvantaged individuals to control the board. SBA deems that to be satisfied in three situations. A single disadvantaged individual owns 100 percent of the voting stock. A single individual owns at least 51 percent of the voting stock, is on the board, and no super-majority requirement exists; if the articles, bylaws or state law require a super-majority, the individual must own at least the percentage needed to overcome it. Or several disadvantaged shareholders qualify the firm together because none holds 51 percent: each is on the board, together they own at least 51 percent, no super-majority requirement exists, and they have enforceable arrangements for one of them to vote all the stock as a block without a shareholder meeting. Where there is a super-majority, they must together own enough to clear it.

The tool above tests the single-person cases. It reports 100 percent as deemed control, 51 percent or more with a board seat as deemed control if the stake clears any super-majority threshold you enter, and otherwise lists what is missing. It does not evaluate the group route, because that depends on a legal arrangement the calculator cannot see.

When the deemed cases do not fit

Where the firm does not fit paragraph (d)(1), the disadvantaged individuals must control the board through actual numbers of voting directors or, where state law permits, weighted voting. The regulation gives a two-person board as an example: if one director is disadvantaged and one is not, the disadvantaged director's vote must be weighted to be worth more than one vote. Quorum rules cannot allow non-disadvantaged directors to control the board directly or indirectly, and any executive committee must be controlled by disadvantaged directors unless it can only make recommendations. Non-voting, advisory or honorary directors may be added without affecting control. Partnerships need a disadvantaged general partner with control over all decisions, and limited liability companies need disadvantaged management members with control over all decisions.

What non-disadvantaged people may and may not do

Paragraph (e) allows non-disadvantaged people to be involved in management and to be stockholders, partners, members, officers or directors. What they cannot do is exercise actual control or have the power to control; be a former employer, or principal of a former employer, of a disadvantaged owner unless the AA/BD decides that the relationship gives no actual or potential control and is in the firm's best interest; or be paid, in any form as a director, officer or employee, more than the highest-ranking officer unless the pay is commercially reasonable or that officer chose lower pay for the firm's benefit. A Participant must tell SBA within 30 calendar days if the top officer's pay falls below a non-disadvantaged person's.

Paragraph (f) creates a presumption of control against a non-disadvantaged person who transferred majority ownership or control to an immediate family member within two years before the application and stays involved as a stockholder, officer or director, rebuttable by showing the transferee has independent management experience. Paragraph (g) lists illustrative indicators of outside control: control of the board through voting majority or quorum blocking, critical financial or bonding support or a critical license from an equity holder, control through loan arrangements (a loan guaranty on commercially reasonable terms alone does not give control), and dependence on business relationships that prevents independent judgment without great economic risk.

Protective rights and active duty

Paragraph (h) matters for firms with investors. SBA will not find a lack of control just because the disadvantaged owner lacks unilateral power over a list of extraordinary actions: adding an equity holder or increasing an investment, dissolving the company, selling it or all its assets, merging it, declaring bankruptcy, amending governance documents to remove those blocking rights, and any other extraordinary action crafted solely to protect minority investors and not to impede the majority's ability to run the business. Paragraph (i) lets a Participant whose disadvantaged individual is a reservist called to active duty designate others to control it during the call-up, with no addition to the program term, or suspend participation.

Worked example

A founder owns 60 percent of the voting stock and sits on the three-person board. The bylaws require a two-thirds vote for major corporate actions. Entering 60 percent and a 66.67 percent super-majority gives a not-deemed result, because 60 percent does not clear 66.67 percent. The founder would have to show board control under paragraph (d)(2), or restructure so the stake clears the hurdle. Change the super-majority to 0 and the same facts are deemed control.

What this page does not decide

Control is a facts-and-circumstances determination, and SBA's rules for the 8(a) program have been the subject of policy and rule changes in 2025 and 2026 that may not be in the eCFR text read here. Do not restructure ownership or governance on the strength of a calculator. Get advice from a government contracts attorney and your SBA district office.

Sources

• 13 CFR 124.106 (eCFR, current as of October 29, 2026): When do disadvantaged individuals control an applicant or Participant? Read November 2, 2026.

Edition read: 13 CFR part 124 as published in the eCFR, current as of October 29, 2026 (read November 2, 2026). The 8(a) program has been the subject of policy and rule changes, and regulations change; this page states only the eCFR text read on that date and may be out of date, so check the current eCFR text and SBA's program pages. This page explains the regulation in plain language and does not replace it. Review needed: business-law YMYL page, not yet reviewed by a qualified professional.