Compensation, Assets Are Issues in 8(a) Rules With the Jan. 28 deadline approaching for comment on SBA’s proposed overhaul of 8(a) rules, the agency has completed a nationwide “listening tour” to hear feedback. While the proposed rules would mean sweeping changes for 8(a) businesses, the impact on owners’ and executives’ compensation are drawing much attention. SBA proposed limiting an 8(a) owner’s annual income to $250,000. Some owners say that ceiling, coupled with a rule requiring that the owner generally must be the highest paid executive, would make it difficult for them to hire top talent. One 8(a) owner, who asked not to be quoted by name, said companies in major metropolitan areas cannot compete for executives in sales, engineering and operations if they can’t offer compensation of more than $250,000. He urged SBA either to set different limits for companies depending on their industry or to adopt locality-based pay differentials like those used for federal employees. “The proposed compensation would not be an issue with low revenue companies,” he wrote. “As companies demonstrate success and grow, however, they need to attract top management talent to ensure the growth does not falter.” The same business owner said the proposed $4 million limit on an owner’s total assets, including equity in the business, is unreasonably low for companies operating under size standards up to $27 million in revenue. He said a company with $20 million in annual revenue and $2 million in profit would quickly exceed the asset limit. “What do you do with that money?” he asked in an interview. “You can’t put it back into the business because that raises your asset base. You can’t pay yourself. Whether you keep it in cash or invest in equipment or facilities, that counts against your asset base.” SBA is proposing no increase in limits on an 8(a) owner’s net worth: no more than $250,000 upon entering the program and no more than $750,000 as long as the business stays in the program. The agency says no increase is needed because the average net worth of an owner entering the program is just $70,000, not counting equity in a home or business.