Minority Business Certification
Are you ready to start your own business, but don’t know where to start or what opportunities are out there for minority entrepreneurs? The following resources provide information on federal government programs and services that help members of minority groups start their own businesses, as well as resources to help finance your new business and where to go to get training and assistance.
How and Why to Get Certified as a Minority-Owned Business
Having your business minority certified can help you tap into a bevy of public and private sector programs. Here’s how to apply:
Corporations, the federal government, and state agencies all want to do business with minority-owned companies. The Department of Defense, for example, requires that recipients of its funding award a percentage of contracts to minority-owned businesses and many large companies want to buy from minority-owned suppliers.
The reason for such mandates is two-fold. First, contracting with minority-owned businesses is important to customers. “Corporate America understands that you cannot expect minorities to buy things when you haven’t done business with minorities. Additionally, Corporate America also understands that with the economy diversifying because of demographic shifts, Corporate America need to diversify faster also,” says Frank Garcia, former Chairman of the New York Statewide Coalition of Hispanic Chambers of Commerce and current Chairman of the National Association of Latino State Chambers of Commerce and a businessman/entrepreneur.
Second, it’s responsible. Randall Toure, the first president of the African American International Chamber of Commerce agrees: “It’s important because we have an obligation in government, state, federal or city to ensure that all firms in our state have an opportunity to participate in contracts that are paid for with tax dollars.” To meet their objectives, private and public sector firms search for minority-owned suppliers through programs that have formal certification processes. If you’re not certified, you can miss out on business ranging from a marketing opportunity; to reduced-competition access to a public contract.
How to Become a Certified Minority-Owned Business: National Minority Supplier Development Council Certification
If your company wants to connect with private-sector buyers, the National Minority Supplier Development Council (NMSDC)’s certification can be a real asset. The organization has an extensive list of members that includes Kellog, American Express, Johnson & Johnson and the World Bank Group, Inc. The Council helps these companies connect with thousands of minority-owned suppliers in its database. You can visit the National Minority Supplier Development Council by clicking here.
Who is eligible? For-profit enterprises of any size that are located in the United States and are owned, operated, and controlled by minority group members who are U.S. citizens. For the purposes of NMSDC’s program, a minority group member is an individual who is a U.S. citizen with at least 25 percent Asian-Indian, Asian-Pacific, Black, Hispanic or Native American heritage. Documentation to support the claim is required. Additionally, at least 51 percent of the business or the company’s stock must be owned by such individuals, and the management and operations must also be controlled by such individuals.
How to apply: Start by contacting one of the NMSDC’s regional councils. Your council will provide you with a standardized application and request documents to support your minority status claim. Unlike most minority-owned certification programs, the organization will make a mandatory visit to your company to verify the information on your application. If your certification is denied, you can appeal within 30 days. If you lose the appeal, you can reapply after a year. In addition to being listed in the Regional Council Minority Supplier Database and NMSDC’s national database, NMSDC certified companies can participate in an advanced management training program, and more. The cost of certification is between $300.00 and $1,500.00, depending on the region.
How to Become a Certified Minority-Owned Business: SBA 8(a) Business Development Program
The Small Business Administration’s 8(a) Business Development Program helps minority-owned companies win contracts in the public sector. In order to comply with the Small Business Act, certain government agencies need to complete their federal contracts with 8(a) participants. In some instances, contracts can be awarded to 8(a) participating companies without competition.
Who is eligible? Small businesses that are owned and controlled by U.S. citizens who are “socially and economically disadvantaged.” Socially disadvantaged refers to individuals who are “subjected to racial or ethnic prejudice” and includes, but is not necessarily limited to, Blacks, Hispanics, Native Americans, Asian-Pacifics and Subcontinent Asians.
Economically disadvantaged is defined by the SBA as “socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged.” The business must be at least 51 percent owned by economically and socially “disadvantaged” individuals. Ownership needs to be direct, which means that businesses owned by another business or trust that are in turn owned and controlled by a “disadvantaged” individual don’t qualify. After meeting these qualifications, the applicant has to also demonstrate a “potential for success.”
The company must have been in business for at least two years prior to applying, and it must submit income tax returns for those two years that show operating revenue. Your company may be eligible to waive the two-year requirement if they meet the five criteria described here.
How to apply: The SBA suggests that every company considering applying for the 8(a) program take an Assess your business to determine whether it is eligible and appropriate for the program. To do business with the federal government, you also must complete the SAM Registration. Be prepared to provide financial statements, federal personal, business tax returns and personal history statements.
The SBA provides free one-on-one counseling through a network of partners to assist in preparing application packages for certification in the 8(a) Program. For consulting and help, click here. The 8(a) program offers specialized business training, counseling and marketing assistance in addition to giving participants access to reduced competition and sole source contracts. Some 2008 training programs that were offered to 8(a) participants included Contract Law and the Legal Aspects of Owning an 8(a) firm, Developing a Winning Cost Proposal, Strategic Marketing and Government Contract Negotiations. The cost of certification is free.
How to Become a Certified Minority-Owned Business: State and Local Programs (MBE)
Many states and cities also have minority-owned business programs, which are often referred to as Minority Business Enterprise (MBE) programs. New York, for example, has a legally mandated program that requires certain percentages of all government contracts, both at a State and City level to be filled by minority-owned businesses. Please visit New York State, Empire Development for more information click here. And for New York City information, click here.
Even though only several states have formal targets in place for awarding contracts to minority- owned businesses, nearly all of them have some type of goal. “It really is in the state’s best interest to use all of our small businesses, including our minority- and woman-owned firms” says Pearl Phillip, president of the New American Chamber of Commerce (NACC).
Who is eligible? For most programs, at least 51 percent of a business needs to be owned by a member of a minority group in order to qualify for certification.
Many states offer programs in addition to favorable contract circumstances for minority-owned businesses. New York City, for example, has a special program for construction firms that have a mentorship program with other construction firms and also special capitalization programs for minority-owned businesses.
Additional Resources
If you are ready for a MWBE Certification, let’s start with a non-committal conversation. To set up an appointment, click here.
Minority Business Certification Questionaire
Contact
Victoria Falk
Vice President, Public Relations AAICC
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