8(a) economic disadvantage: net worth and income limits

What economic disadvantage means here

The 8(a) program has two disadvantage requirements. Social disadvantage is covered in section 124.103. Economic disadvantage, the subject of this page, is covered in section 124.104. The definition in paragraph (a) is that economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired by diminished capital and credit opportunities compared with others in the same or similar line of business who are not socially disadvantaged. The rest of the section turns that idea into money tests. This page uses the eCFR text, current as of October 29, 2026.

Each individual claiming economic disadvantage submits personal financial information. If married, the individual must also submit separate financial information for the spouse, unless they are legally separated. SBA considers the spouse's financial situation in judging access to credit and capital where the spouse has a role in the business, as an officer, employee or director, or has lent money to, supported the credit of, or guaranteed a loan of the business. SBA does not take community property laws into account.

The three thresholds

Paragraph (c) tells SBA to look at income for the past three years, including bonuses and company stock received in place of cash, personal net worth, and the fair market value of all assets, whether or not they are encumbered. An individual who exceeds any one of the thresholds is generally deemed to have access to credit and capital and is not economically disadvantaged. The thresholds as printed in the text read here are these.

Net worth must be less than $850,000. A figure of exactly $850,000 does not pass, because the text says less than. In computing net worth, SBA excludes the ownership interest in the applicant or Participant and the equity in the primary personal residence, except any part of that equity attributable to excessive withdrawals from the firm. Those exclusions do not apply to the other tests. Contingent liabilities do not reduce net worth, and funds in an IRA or other official retirement account are not counted, though SBA may ask about the account's terms and require a certification that it is legitimate.

Income is the second test. SBA presumes an individual is not economically disadvantaged if adjusted gross income averaged over the three preceding years exceeds $400,000. The word presumes is important, because the presumption can be rebutted by showing that the income level was unusual and unlikely to recur, that losses commensurate with and directly related to the earnings were suffered, or by other evidence that the income does not indicate a lack of disadvantage. Income received from an S corporation, LLC or partnership applicant or Participant can be excluded if documentary evidence shows it was reinvested in the firm or used to pay taxes arising in normal operations. The firm's own losses are the company's, not the individual's, and cannot be used to reduce personal income.

The third is total assets. An individual will generally not be considered economically disadvantaged if the fair market value of all assets exceeds $6.5 million, including the primary residence and the value of the applicant or Participant firm. The only asset excluded from that test is money in a qualified IRA account that meets the net worth exclusion.

Why the exclusions differ by test

This is the part people trip over. The net worth test leaves out the firm and the home, so a founder whose wealth is mostly company stock and house equity can pass it comfortably. The asset test puts both back in, with a ceiling of $6.5 million. The regulation says plainly that exclusions for net worth purposes are not exclusions for asset valuation or access to capital and credit purposes. A person can therefore pass the net worth test and still be over on assets, which is why the tool above asks for two different figures.

Transfers to family within two years

Paragraph (c)(1) stops people from getting under the limits by moving assets to relatives. SBA attributes to the individual any assets transferred for less than fair market value to an immediate family member, or to a trust with an immediate family member as beneficiary, within two years before the application or within two years of a Participant's annual program review. The exception is a transfer for the family member's education, medical expenses or other essential support, shown by the individual. Gifts that are consistent with the customary recognition of special occasions, such as birthdays, graduations, anniversaries and retirements, are not attributed. SBA may also weigh assets transferred in that window, such as gifts to charity, in judging access to capital and credit even when they are not counted in net worth.

Alaska Natives have a special rule for net worth: assets and income from sources other than an Alaska Native Corporation are included, while certain amounts received from an ANC are excluded, including cash up to $2,000 per person per year, stock, a partnership interest, land or an interest in land, and an interest in a settlement trust.

The social disadvantage companion test

Economic disadvantage is defined only for individuals who are also socially disadvantaged. The text of section 124.103 in the October 29, 2026 eCFR issue carries the citation 91 FR 51572, August 11, 2026. As read, it states that a Citizen must show with evidence that a governmental or private entity's action, policy, rule or practice favored other groups or disadvantaged the Citizen's group, and must self-certify membership in the group at the relevant time and material harm. The section as read does not contain a group-based presumption. That is a recent change in the text, and the program has been the subject of other policy and rule changes in 2025 and 2026, so confirm the current standard before building an application around either test.

Worked example

An applicant has net worth of $600,000 after excluding the firm and primary residence equity. Adjusted gross income was $320,000, $410,000 and $450,000 in the three most recent years, an average of $393,333. Total assets, including a home and the firm, have a fair market value of $5.2 million. Net worth is under $850,000, the three-year average is under $400,000 (the middle year alone is over, but the test is the three-year average), and assets are under $6.5 million. None of the thresholds is exceeded. Raise the first-year income to $380,000 and the average becomes $413,333, so the presumption applies; the applicant could try to rebut it by showing the income was unusual or offset by related losses.

What this page does not decide

The tool applies the printed thresholds to numbers you supply. It does not tell you how SBA will value your assets, whether a transfer will be attributed, or whether a rebuttal will succeed, and it does not replace the personal financial statements SBA requires. The figures are the ones the text shows as of October 29, 2026, and SBA's 8(a) program has been the subject of policy and rule changes in 2025 and 2026 that may not appear there. Talk to your SBA district office or a government contracts attorney before you apply or certify.

Sources

• 13 CFR 124.104 (eCFR, current as of October 29, 2026): Who is economically disadvantaged? Read November 2, 2026.
• 13 CFR 124.103 (eCFR, current as of October 29, 2026): Who is socially disadvantaged? (read for the companion test and its amendment citation) 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.