[Code of Federal Regulations]

[Title 13, Volume 1]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 13CFR124.103]



[Page 365-366]

 

                TITLE 13--BUSINESS CREDIT AND ASSISTANCE

 

                CHAPTER I--SMALL BUSINESS ADMINISTRATION

 

PART 124_8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS STATUS 

DETERMINATIONS--Table of Contents

 

                   Subpart A_8(a) Business Development

 

Sec. 124.103  Who is socially disadvantaged?



    (a) General. Socially disadvantaged individuals are those who have 

been subjected to racial or ethnic prejudice or cultural bias within 

American society because of their identities as members of groups and 

without regard to their individual qualities. The social disadvantage 

must stem from circumstances beyond their control.

    (b) Members of designated groups. (1) There is a rebuttable 

presumption that the following individuals are socially disadvantaged: 

Black Americans; Hispanic Americans; Native Americans (American Indians, 

Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans (persons 

with origins from Burma, Thailand, Malaysia, Indonesia, Singapore, 

Brunei, Japan, China (including Hong Kong), Taiwan, Laos, Cambodia 

(Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust Territory of 

the Pacific Islands (Republic of Palau), Republic of the Marshall 

Islands, Federated States of Micronesia, the Commonwealth of the 

Northern Mariana Islands, Guam, Samoa, Macao, Fiji, Tonga, Kiribati, 

Tuvalu, or Nauru); Subcontinent Asian Americans (persons with origins 

from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives 

Islands or Nepal); and members of other groups designated from time to 

time by SBA according to procedures set forth at paragraph (d) of this 

section. Being born in a country does not, by itself, suffice to make 

the birth country an individual's country of origin for purposes of 

being included within a designated group.

    (2) An individual must demonstrate that he or she has held himself 

or herself out, and is currently identified by others, as a member of a 

designated group if SBA requires it.

    (3) The presumption of social disadvantage may be overcome with 

credible evidence to the contrary. Individuals possessing or knowing of 

such evidence should submit the information in writing to the Associate 

Administrator for 8(a) BD (AA/8(a)BD) for consideration.

    (c) Individuals not members of designated groups. (1) An individual 

who is not a member of one of the groups presumed to be socially 

disadvantaged in paragraph (b)(1) of this section must establish 

individual social disadvantage by a preponderance of the evidence.

    (2) Evidence of individual social disadvantage must include the 

following elements:

    (i) At least one objective distinguishing feature that has 

contributed to social disadvantage, such as race, ethnic origin, gender, 

physical handicap, long-term residence in an environment isolated from 

the mainstream of American society, or other similar causes not common 

to individuals who are not socially disadvantaged;

    (ii) Personal experiences of substantial and chronic social 

disadvantage in American society, not in other countries; and

    (iii) Negative impact on entry into or advancement in the business 

world because of the disadvantage. SBA will consider any relevant 

evidence in assessing this element. In every case, however, SBA will 

consider education, employment and business history, where applicable, 

to see if the totality



[[Page 366]]



of circumstances shows disadvantage in entering into or advancing in the 

business world.

    (A) Education. SBA considers such factors as denial of equal access 

to institutions of higher education, exclusion from social and 

professional association with students or teachers, denial of 

educational honors rightfully earned, and social patterns or pressures 

which discouraged the individual from pursuing a professional or 

business education.

    (B) Employment. SBA considers such factors as unequal treatment in 

hiring, promotions and other aspects of professional advancement, pay 

and fringe benefits, and other terms and conditions of employment; 

retaliatory or discriminatory behavior by an employer; and social 

patterns or pressures which have channelled the individual into 

nonprofessional or non-business fields.

    (C) Business history. SBA considers such factors as unequal access 

to credit or capital, acquisition of credit or capital under 

commercially unfavorable circumstances, unequal treatment in 

opportunities for government contracts or other work, unequal treatment 

by potential customers and business associates, and exclusion from 

business or professional organizations.

    (d) Socially disadvantaged group inclusion--(1) General. 

Representatives of an identifiable group whose members believe that the 

group has suffered chronic racial or ethnic prejudice or cultural bias 

may petition SBA to be included as a presumptively socially 

disadvantaged group under paragraph (b)(1) of this section. Upon 

presentation of substantial evidence that members of the group have been 

subjected to racial or ethnic prejudice or cultural bias because of 

their identity as group members and without regard to their individual 

qualities, SBA will publish a notice in the Federal Register that it has 

received and is considering such a request, and that it will consider 

public comments.

    (2) Standards to be applied. In determining whether a group has made 

an adequate showing that it has suffered chronic racial or ethnic 

prejudice or cultural bias for the purposes of this section, SBA must 

determine that:

    (i) The group has suffered prejudice, bias, or discriminatory 

practices;

    (ii) Those conditions have resulted in economic deprivation for the 

group of the type which Congress has found exists for the groups named 

in the Small Business Act; and

    (iii) Those conditions have produced impediments in the business 

world for members of the group over which they have no control and which 

are not common to small business owners generally.

    (3) Procedure. The notice published under paragraph (d)(1) of this 

section will authorize a specified period for the receipt of public 

comments supporting or opposing the petition for socially disadvantaged 

group status. If appropriate, SBA may hold hearings. SBA may also 

conduct its own research relative to the group's petition.

    (4) Decision. In making a final decision that a group should be 

considered presumptively disadvantaged, SBA must find that a 

preponderance of the evidence demonstrates that the group has met the 

standards set forth in paragraph (d)(2) of this section based on SBA's 

consideration of the group petition, the comments from the public, and 

any independent research it performs. SBA will advise the petitioners of 

its final decision in writing, and publish its conclusion as a notice in 

the Federal Register. If appropriate, SBA will amend paragraph (b)(1) of 

this section to include a new group.