The Steps and Benefits to Becoming Certified as a Minority Business Owner

If you are a minority business owner, it’s a good idea to become certified as a minority-owned business. Government agencies and corporations actually set goals for conducting business and buying from minority-owned companies, so becoming certified immediately increases your business’ appeal.

Corporations want to do business with minority-owned businesses because they realize that U.S. minorities have great purchasing power. And needless to say, if they want minorities to purchase their products and services, they have to support their businesses in return.

Federal officials support minority-owned businesses because they realize that by doing so, they will help the country grow a sustainable economic climate.

So, now that you know the benefits of being a minority-owned business, it’s time to look at how you can officially certify your business as minority-owned.

The National Minority Supplier Development Council

Becoming certified with the National Minority Supplier Diversity Council (NMSDC) is a great way to position your business for growth by connecting with private sector buyers. The National Minority Supplier Development Council matches certified minority-owned businesses with members of their network who need to purchase products, services, and solutions. Currently, they have matched 12,000 certified minority-owned businesses. Their network includes a national office located in New York City, 24 affiliate regional councils nationwide, and 1,750 corporate members to date. Additionally, the council offers management training programs and a working capital loan program.

NMSDC Eligibility Requirements

In order to be eligible to start the certification process and to be considered a Minority Business Enterprise (MBE), at least 51% of the business must be owned by a United States citizen who is Asian, Black, Hispanic, or Native American. Or, if the business is a publicly owned business, such individuals must own at least 51% of the stock.

NMSDC Certification Process

The first step in the certification process is to gather the necessary documents. The documentation required depends on the type of business you have, but typical documents for corporations include:

  • The history of the business
  • Certificate of Incorporation or Articles of Incorporation
  • Stock Certificates and Stock Ledger
  • Bylaws
  • All ownership agreements
  • Business cards, resume, and copies of drivers’ licenses
  • Proof of U.S. Citizenship (Birth Certificate or U.S. passport)
  • Corporate Bank Resolution which includes your Bank Signature Card
  • Business Lease Agreement and/or Security Deeds if home-based
  • Proof of general liability insurance and depending on the type of business proof of bonding
  • Copies of canceled business checks

Before you can complete the application, you must register at nmsdc.org. and create a login.

Application Process

The steps to apply are as follows:

  1. Review eligibility requirements.
  2. Review online application so you have all of your answers and required documents.
  3. Start the online application by clicking the Start MBE Certification You will need to have your Tax ID (Employer Identification Number) on hand.
  4. Once you start your application, an Application ID will be assigned to your business.
  5. You have to upload your documents. Make sure that your documents are scanned files, jpegs, or pdfs and each copy includes the name of your company.
  6. The fee for certification is due upon submission of the application and must be paid by credit card. The fees are dependent upon the annual revenue of a business. But for businesses that have an annual revenue of $1 million or less, the filing fee is $350.
  7. Once all of the required documents have been verified a Field Auditor will contact you to schedule an on-site visit.
  8. Your completed application will be forwarded to the Board Certification Committee for final review and approval.
  9. Once approved, a certification letter and MBE certificate is emailed to you. Normal processing time is 45 days.

Department of Transportation

The Department of Transportation (DOT) requires that at least 10 percent of their budget is allocated for contracts awarded to minority-owned businesses. Thus, departments that receive funding from the DOT, including state agencies, are required to develop Disadvantaged Business Enterprise (DBE) programs. Each DBE must create annual goals that include establishing contracts and specific subcontract goals.

In order to be recognized as a DBE, you must go through your state department of transportation. Each agency has a DBE Site. Here is a list of all of the state departments of transportation and DBE Program Websites. Once you are approved as a DBE, your business will be listed on the DBE directory.

Eligibility

To be certified as a DBE, you must be a small business owned and controlled by socially and economically disadvantaged individuals.

Application Process

To start the process to be recognized as a DBE, you must contact your state transportation agency. The U.S. Department of Transportation does not review the applications. However, you can view the application form on their website.

State and Local Agency Certification

Most state and local agencies offer minority-owned business programs. Similar to other certifications, the requirements are that 51% of the company is owned by a member of a minority group. Check with your state to find out what programs are available to you.

Other Helpful Resources for Minority-Owned Businesses

Minority Business Development Agency

The U.S. Department of Commerce-Minority Business Development Agency (MBDA) assists minority business owners. The MBDA has secured an average of $49 million worth of contracts for minority businesses. The agency works with businesses that have been certified with the National Minority Supplier Development Council. The MBDA offers a plethora of tools for minority business owners to connect with government contracting opportunities.

The MBDA has business centers across the country. The business centers are located in areas with high levels of minority concentration. You can view a list of business centers here. To get started accessing MBDA opportunities, you must first register for the MBDA Online Business Applications. You can access the tool by registering on their website, MBDA.gov.

Small Business Administration 8(a) Business Development Program

The Small Business Administration does not certify minority-owned businesses. However, their 8(a) Business Development Program provides assistance by helping minority-owned businesses gain access to government contracting opportunities. Specifically, recipients can receive contracts up to $4 million for goods and services and up to $6.5 million for manufacturing. A great benefit to this program is that those selected into the program can create joint ventures with one another to bid on contracts.

Eligibility

The business has to be at least 51% owned by an individual who is either socially or economically disadvantaged. You can view the breakdown of the eligibility requirements for Social Disadvantage Eligibility and Economic Disadvantage Eligibility at sba.gov.

  • The individual must be an American citizen
  • The business must be a small business
  • Separate eligibility requirements exist for those businesses owned by American Indians, Native Alaskans, Native Hawaiians, or Certified Development Companies

Required Documents

Some of the documents that you will need before applying include:

  • Your business tax returns for the past 3 years
  • Your personal tax returns for the past 3 years
  • Business Financial statements for the past 3 years
  • Business Balance Sheet including profit and loss statements for the past 3 years.
  • Lease Agreements
  • Bank Agreements including signature card or statement
  • Documented proof of contributions, transfer of assets for the past 2 years
  • Incorporation or Limited Liability documentation including Articles of Incorporation, Certificate of Incorporation, or Articles of Organization
  • Any DBA filings (Doing Business As)
  • Bylaws
  • Meeting Minutes
  • Stock certificates and ledgers

Visit the 8(a) Application Checklist for a complete list of documents required.

Application Process

The steps to apply are as follows:

  1. View the SBA online course Pre 8(a) Business Development Program Module 1-Setting Expectations.
  2. Obtain official copies of all government documents. This is outlined in the checklist portion.
  3. Obtain a free D-U-N-S number from Dunn and Bradstreet.
  4. Obtain an SBA General Login System user ID.
  5. Start the free 8(a) online application.

Are you a minority-owned business? Have you ever thought about small business loans

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