If you are a minority business owner, one step you can take to expand your business is to become officially certified. Corporations, the federal government, and state agencies all want to do business with minority-owned companies. Becoming certified as a minority-owned business allows you to access certain government and private-sector programs that can help support your business growth.
Andrew Magnus, Owner/President of the successful BTC Envelopes and Printing, LLC, shares why he received a minority-owned business certification.
“I only knew one minority business owner. A big part of my push was to create a greater minority presence in a multi-billion dollar industry.” Magnus grew his company using his minority-owned business certification to target companies and institutions with a diversity spend initiative.
If you're not certified, you may be missing out on things like marketing opportunities or access to a reduced-competition contract.
What is a minority owned business?
To be certified as a minority-owned business, your company must be at least 51% owned, operated, and controlled by a minimum of one U.S. citizen whose ethnic background is at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic, or Native American.
Types of minority owned business certification
Here’s information on three types of certification available for qualified business – Federal government certification, private sector certification, and state and local agency certification.
Federal government certification
To help minority owned businesses thrive in the public sector, the Small Business Administration (SBA) has a program for ‘socially and economically disadvantaged’ businesses which minority-owned businesses are typically classified as. The program is referred to as the 8(a) Business Development Program.
The Code of Federal Regulations of the United States of America defines ‘economically disadvantaged’ 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.’
To be eligible for 8(a) Business Development Program, a small business must:
- Be classified as “small” by SBA standards at the time of application and throughout the 9-year program term. To check if your business qualifies as a small business for government contracting purposes, click here.
- Have not participated in the 8(a) program
Be at least 51% unconditionally and directly owned and controlled by US citizens who are socially disadvantaged individuals and considered economically disadvantaged
- Show potential for success and have the necessary financial capacity to perform on federal contracts successfully
- Demonstrate “good character”
- Not owe any outstanding federal financial obligations
- Be owned by someone whose personal net worth is $250,000 or less
- Be owned by someone whose average adjusted gross income for three years is $250,000 or less
- Be owned by someone with $4 million or less in assets
- Show potential for success and be able to perform successfully on contracts
How to get certified for the 8(a) Business Development Program:
To get certified, you first need a profile at SAM.gov before you can provide your business information on the certify.SBA.gov website. If you’re accepted into the program, you will receive a letter from the SBA to let you know that your application was approved; you will also receive a letter if you were denied.
Private sector certification
The National Minority Supplier Development Council (NMSDC) has programs for minority-owned businesses who want to connect with companies in the corporate world.
Once approved, your business will be listed as an MBE in the regional and national Minority Supplier Databases. The NMSDC has a huge list of corporate members and private-sector companies your business can connect with to win contracts.
To meet the NMSDC’s criteria for certification, minority businesses must:
- Be at least 51% minority-owned operated and controlled. Under the NMSDC program, a minority group member is an individual who is a U.S. citizen with at least one quarter of the following: Asian-Indian, Asian-Pacific, Black, Hispanic, or Native American.
- A U.S. citizen whose origins are from India, Pakistan, or Bangladesh.
- A U.S. citizen whose origins are from Japan, China, Indonesia, Malaysia, Taiwan, Korea, Vietnam, Laos, Cambodia, the Philippines, Thailand, Samoa, Guam, the U.S. Trust Territories of the Pacific or the Northern Marianas.
- A U.S. citizen who is of African descent.
- A U.S. citizen of true-born Hispanic heritage, from any of the Spanish-speaking areas of the following regions: Mexico, Central America, South America and the Caribbean Basin only. Brazilians (Afro-Brazilian, indigenous/Indian only) shall be listed under Hispanic designation for review and certification purposes.
- A person who is an American Indian, Eskimo, Aleut or Native Hawaiian, and regarded as such by the community of which the person claims to be a part. Native Americans must be documented members of a North American tribe, band or otherwise organized group of native people who are indigenous to the continental United States and proof can be provided through a Native American Blood Degree Certificate (i.e., tribal registry letter, tribal roll register number).
- Be a profitable enterprise and physically located in the U.S. or its trust territories.
- Show that management and daily operations are exercised by the minority ownership member(s).
How to get certified by the NMSDC:
If you want to be a certified minority-owned business, you can apply for certification at the National Minority Supplier Development Council (NMSDC). The NMSDC MBE certification process begins with contacting the regional affiliate closest to your business’s headquarters.
- Make sure your business qualifies according to the certification criteria.
- Gather required documentation. Documentation requirements include business history, certificate and articles of incorporation, cancelled checks, completed online application, and more. An application fee must be paid online via credit card. Processing of your application does not begin until payment is received.
- Upload the required documentation via the online certification application.
- Schedule site visit and interview.
The Certification process can take up to 90 days. You will be notified via e-mail and postal mail if approved. If your application is rejected, you can submit an appeal letter.
State and local agency certifications
To participate in the MBE programs in your state, contact your state or local programs for instructions. To get certified as an MBE in your state, you’ll need to apply at the regional office closes to your business headquarters. Find links to state and local sponsored MBE and DBE programs here.
Benefits of becoming certified as a minority business owner
Building a sense of community
Becoming a certified minority-owned business opens up new networks of people who want you to succeed. You’ll meet fellow business owners, interact with large corporations and participate in employee resource groups.
Landing unlikely contracts
Major corporations actually go to great lengths to do business with minority owned certified companies with some legally obligated to. Your certification can help level the playing field for your business when competing for contracts.
Increased marketing opportunities
If you receive the certification, announce it far and wide with a press release, messaging on your website, email campaigns and on marketing materials. You can benefit especially if your business is located in a minority community. Minority populations often want to support minority businesses.
Access to government contracts
Access to and eligibility for government contracts is a great benefit for certified businesses. Federal, state and local governments often mandate that at least some percentage of business goes to qualified minorities.
Setting Yourself Apart
Having this certification shows that you’re proud of your status and interested in growing your business. This is a good message to spread to both current and potential clients and customers. Being apart from the crowd helps open up more opportunities.