Steps to Get Certified as a Minority-Owned Small Business

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Katie Fleming

Co-founder and COO of Owner Actions

A business owner works through the application to become a minority-owned business.

Historically, minority business owners have been up against more challenges than others in building a successful, thriving business. Fortunately, the U.S. government and other agencies are working hard to change that. One of the steps they encourage is for owners to get certified as a minority-owned business.

 

Why should I get my business certified as a minority-owned business?

There are four important reasons to get a minority-owned business certification:

  1. Access to funding.
    Often, federal and state governments and other agencies specifically earmark money to support new and growing minority-owned businesses. This money often comes in the form of grants, but it can also include loans that can help business owners succeed.
  2. Access to federal contracts.
    Many federal agencies commit to giving a percentage of their contracts to businesses that are certified as minority-owned enterprises. This certification can give business owners an edge and open the door to both short-term and long-term opportunities.
  3. Opportunities for professional development.
    Owners who complete the certification process can often gain entry to industry and agency training programs that help owners learn important skillsets and broaden their networks.
  4. Tax benefits for others who engage with your business.
    While there aren’t currently any tax incentives for minority-owned businesses, companies that partner or work with certified minority-owned businesses can receive some tax benefits.

 

Does my business qualify as a minority-owned enterprise?

In most cases, you can qualify as a minority-owned business under the following conditions:

  • You own at least 51% of the business.
  • You are a U.S. citizen.
  • Your race is at least 25% Black, Asian, Pacific Islander, Latino, Hispanic, or Native American.
  • Your business is for-profit and is located within the United States or its territories.

 

Though women are in the minority when it comes to gender and owning businesses, they don’t qualify for traditional minority-owned enterprise certification programs. However, women can attain a certification as a woman-owned business through the Women’s Business Enterprise National Council (WBENC), which affords many of the same benefits as a minority-owned enterprise certification. You can learn more about this certification here.

 

What is the process for becoming certified as a minority-owned business?

Most owners choose to certify their businesses through one of these programs:

  1. The National Minority Supplier Development Council (NMSDC)
  2. The Small Business Administration (SBA)
  3. State-specific programs

 

Through each of these programs, owners can expect to complete a business profile on the certifying organization’s website, upload supporting documents, host a site visit, and contribute to a review process usually lasting between 30-90 days. The specific documents required vary from one organization to the next, but you can expect to submit some or all of the following:

  • Financials, including federal tax returns and profit and loss statements
  • Organizing documents, including articles of organization (or articles of incorporation) and bylaws
  • Personal records, including a photo ID, resumé, and proof of citizenship

 

NMSDC certification

For owners who plan to sell to the private sector, the NMSDC is a popular program offering a wealth of benefits. This program grants access to private contract opportunities with large corporations, funding opportunities, access to technical and leadership training, and opportunities to build a network with other minority business enterprises.

This program also requires businesses to be at least 51% owned by a person identifying as a minority, and it’s only available for for-profit companies in which the management and daily operations are completed by minority owners. You can view other criteria and find out if you qualify here.

If you’d like to apply, visit www.nmsdc.org and connect with a regional affiliate who will guide you through the process. Expect to pay $350 or more to attain this certification.

 

SBA certification

The SBA’s 8(a) Business Development program is a great choice for owners who are interested in going after government contract opportunities that are set aside for minority-owned businesses. But beyond enabling owners to compete for contracts, people who certify through this program can receive ongoing support and assistance from an SBA Business Opportunity Specialist, an SBA mentor, and training opportunities.

This program requires owners to have an economic disadvantage (with a personal net worth of $750,000 or less, an average adjusted gross income over the past three years of $350,000 or less, and no more than $6 million in assets). Owners must also affirm that they operate a small business, have not previously participated in the 8(a) program, possess good character, and have the potential success (often demonstrated by having been in business for at least two years). You can find out if your business qualifies through the SBA’s Am I Eligible? tool.

Interested in beginning the application process? Visit certify.sba.gov to get started.

 

State certification

Several states also offer certifications for minority-owned businesses. These certification programs are designed to help owners win state and local government contracts, including those set aside specifically for minority business owners.

Interested in learning if your state offers a certification program for minority-owned businesses? This link will help you find the contact organization in your state.

You may also find some programs in your city or municipality. You can contact your local economic development agency to learn about the programs they currently offer.

 

Taking the next steps to certify as a minority-owned business

If access to more work, training opportunities, and networking appeals to you, consider reaching out to the NMSDC, SBA, and state and local agencies that offer certification programs. Most of these certifications take some time to complete, and they can be complicated to work through. Each organization may recommend working with an advisor to complete the process as quickly as possible and begin realizing the benefits.

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