If you want to take advantage of the many private and public programs specifically created to help minority-owned businesses, your business needs to be certified as a Minority Business Enterprise (also known as an MBE) or Minority-Owned Business.
In this guide, we will look at different organizations that certify MBEs. We’ll also spell out the terms and requirements for eligibility, so you can get an idea of whether you qualify.
Different types of certification for MBEs
The type of certification you seek depends on the programs you’d like to participate in. The Federal Government, state and local agencies, and private sectors all have different types of certification. Each has their formal certification process and criteria. While there’s some overlap between them, you’ll want to understand the differences, which we’ll look at below.
Federal government certification
To help you succeed 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.
- Not already have 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:
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 with.
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:
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 has several regional councils. The NMSDC MBE certification process begins with contacting the regional affiliate closest to your business’s headquarters. For more details, click here to locate the appropriate regional affiliate for your business.
Steps to getting certified by the NMSDC:
- First, ensure that your business qualifies according to the certification criteria.
- Gather required documentation. Documentation requirements are as follows:
- The History of Business
- Certificate of Incorporation
- Articles of Incorporation
- Stock Certificates and Stock Ledger
- Minutes to Board of Director’s meetings as well as Shareholder’s meetings
- Bylaws (executed and attested) and Amendments (if applicable)
- All agreement(s) pertaining to ownership, operation, and control of the business
- Business cards that list appropriate corporate titles, copies of resumes, copy of driver’s licenses and proof of US Citizenship (Birth certificates or U.S. Passports only) for all Principals
- Corporate Bank Resolution Agreement(s) to include Bank Signature Card(s)
- Business Lease Agreement(s) (and Security Deeds if home-based)
- Proof of general liability insurance and in some cases bonding
- Copies of the businesses’ cancelled checks
- Complete the online application in full. Before beginning the online application, you need to register on the NMSDC site.
- Application fee must be paid online via credit card. Processing of your application begins when 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. Wait for final approval from both Committee and Board Members. If your application is approved, you will be notified via e-mail and postal mail. If the Board rejects your application, you can submit an appeal letter.
State and local agency certification
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, so follow the steps outlined above.
Take advantage of every opportunity
Historically, minority business owners have faced particular challenges when it comes to getting access to business financing and winning large contracts. According to a 2016 survey conducted by Biz2Credit on more than 1,500 minority business owners, over a third reported that lack of adequate funding was their biggest challenge.
Given this and all the other challenges inherent in running a business, it’s worth it to explore how to take advantage of every opportunity available. Certified MBEs can get favorable contract opportunities, special business training workshops and conferences, marketing assistance, and more valuable resources.
Want to learn more about funding for minority business owners? Check out our guide to business funding for minorities.