Historically, some minority-owned businesses have not been able to access resources meant to jump start an entrepreneur’s dream. Recently, a range of programs, grants, and benefits have been introduced for minority-owned businesses to support diverse business development. If you’d like to be formally recognized as a minority-owned business, an opportunity to get an official certification exists. While this can be a process, it can provide multiple benefits, and can be a launching pad for business growth.
Minority Business Enterprise Certifications
A minority business enterprise (MBE) is a designation for businesses which are at least 51% owned, operated and controlled on a daily basis by a minority group. Through this certification process, you gain access to the public and private programs designed to support minority business owners. Once you complete the proper paperwork to get registered, your business can expand its opportunities. On a national level, designation is handled by the Minority Business Development Agency (MBDA), but there are many city, county, and state programs as well.
Is My Business MBE Eligible?
Each agency and program has their own criteria. Here are a few programs you can explore:
- National Minority Supplier Development Council (NMSDC)
- U.S. Small Business Administration’s 8(a) Business Development Program (SBA)
- U.S. Department of Transportation’s Disadvantaged Business Enterprise Program (DBE)
- State offices for minority (MBE) and women business enterprises (WBE)
We’ll review the exact qualifications needed to participate in each type of program. Most programs require a minority group member business owner to own at least 51% of the business. Minority group members may be defined as U.S. citizens, with at least 25% Asian American, Asian Indian, Asian Pacific, Hispanic American, African American, or Native American heritage. Some programs determine eligibility through those considered “socially and economically disadvantaged.” In addition to minority business owners, this may include women-owned businesses or those owned by individuals with a disability.
How Much Does an MBE Certification Cost?
Several variables will impact the cost of an MBE certification, including which pathway you pursue and what area you are located. For example, a certification through the NMSDC may cost anywhere from $350 to $1,200, depending on the region. In addition to gaining access to bid on private-sector buyer contracts, you also may participate in management training programs, attend business opportunity fairs, and possibly qualify for working capital loans.
Conversely, there is no fee associated with getting certified through the Small Business Administration or Department of Transportation’s programs. State and local programs may have fees and can vary depending on the area.
What are the Benefits of Having an MBE Certification?
You may reap numerous benefits from becoming a formally certified minority business owner. Some examples may include:
- Having a sense of community
- Landing contracts that once seemed unlikely
- Having marketing opportunities
- Getting access to government contracts
- Gaining access to more government resources
- Having more opportunities
- Placing your business in front of large corporations
- Setting yourself apart from other businesses
One example of a minority business owner is “Shark Tank” star Daymond John, who continues to strive for minority ownership businesses to have a fair shot. One way he is helping to change that is through partnering with home improvement store Lowe’s to give diverse small businesses a chance to pitch their products to get placed on their shelves. He’s extended this to minorities, women, veterans, those who are disabled, and those who are part of the LGBTQ community.
How do I become a minority-certified business?
Establishing your business as minority-owned can prove to be a crucial step for success. Here are the details on which certifications you can get and how to apply.
Federal Government Certification
Small Business Administration’s 8(a) Business Development Program
One type of MBE certification is available through the SBA’s 8(a) Business Development Program, which helps minority-owned businesses obtain contracts in the public sector. Some government agencies are required to complete eight contracts with participating businesses through the Small Business Act.
To be eligible, the majority business owner must be considered “socially disadvantaged” due to being subject to racial prejudice or “economically disadvantaged” when their ability to compete is impaired by diminished capital and credit opportunities. In addition to these qualifications, a company must be in business for two years before applying (with some exceptions) and must demonstrate a potential for success.
How to apply:
- Check whether you qualify using the SBA’s Certify website.
- Create a profile at SAM.gov.
- Complete the certification process using Certify.SBA.gov.
- Update your SAM.gov profile to show contracting officers that your business is in the program.
- Wait for a letter, which will be sent with your approval or denial. (Certification lasts a maximum of nine years, and you’ll need to complete annual reviews to maintain good standing.)
Department of Transportation’s Disadvantaged Business Enterprise (DBE) Program
The DOT requires at least 10% of contracts to be designated for minority-owned businesses. Small businesses owned by a socially and economically disadvantaged individual may qualify. The DOT includes minority-owned and women-owned businesses in this definition, and in some cases, those owned by an individual with a disability. However, a person with a net worth of over $750,000 cannot qualify for DBE programs. DBE programs may vary from state to state.
How to apply:
- You will need to contact your state or local transportation entity to request a certification application. Here is a complete list of certifying agencies to request an application.
- You can find more information and check eligibility requirements on DBE programs on the Transportation.gov website.
- You must also submit an application to the Uniform Certification Program (UCP) to your state, which will vary.
Private Sector Certification
National Minority Supplier Development Council (NMSDC) Certification
By acquiring this NMSDC certification, you can connect with some well-known, private-sector buyers. This impressive list includes Microsoft, IBM, and Marriott. Over 17,000 minority-owned businesses are in this database, and several states also accept NMSDC certification to help minorities win public-sector contracts, as well.
Any for-profit business that is majority owned by a minority group member is considered eligible for this certification. For the NMSDC qualifications, a business owner is considered a minority group member when they can provide documentation showing they are a U.S. citizen with at least 25% Asian American, Asian Indian, Asian Pacific, Hispanic American, African American, or Native American heritage.
How to apply:
- Register with NMSDC.org.
- Check eligibility requirements and gather supporting documents before you begin.
- Complete the NMSDC certification program application online at nmsdc.org/mbes/mbe-certification.
- Upload supporting documents.
- Pay the application fee online.
- Schedule a site visit and interview. (You can contact an NMSDC certification specialist to see if there are any COVID-19-related adjustments to this part of the process.)
- Wait for approval from both the committee and board members.
State and Local Agency Certification
State Offices for Minority (MBE) and Women Business Enterprises (WBE)
In addition to federal programs, many states and cities have MBE and WBE programs to support minority business development. Qualification details will vary by area, but many states have programs supporting minority-ownership businesses and women business enterprises.
How to apply:
- For this certification process, contact your local or state office to request more information on available programs and any applications available. This will vary from state to state.
- A complete list of offices by state can be found here.
ZenBusiness is Here to Support MBE Companies
Certifying your business as minority-owned can open up an abundance of business opportunities and networking relationships, and can work toward the overall growth of minority business development.
Now that you know the steps and eligibility requirements, don’t hesitate to start the certification process today. ZenBusiness supports diverse small businesses, and we would love to help you grow your diverse small business. Explore our fast business filing services, business formation plans, and tips on how to run your business today.