If you identify as a minority small business owner, you know firsthand how systemic barriers pose challenges to growing your business. However, getting certified as a Minority Business Enterprise (MBE) can help you overcome some of these challenges by giving you access to programs that provide professional connections and resources that can help strengthen your business.
As a certified MBE, you’ll have more opportunities to bid for both corporate and federal business contracts. You can also be eligible for funding, such as grants, and participate in business development training. In this article, we’ll look at the different avenues for certification and how they can benefit your business.
What is a Minority Business Enterprise?
A Minority Business Enterprise is most commonly defined as a company that is at least 51 percent owned and operated by an individual who is a U.S. citizen and is at least 25 percent African American, Asian American, Pacific Islander, Latinx or Hispanic, or Native American descent. If the company is publicly traded, there can be requirements that enforce shareholder and employee diversity, as well. Oftentimes, a publicly traded company must be at least 51 percent minority-owned, and the core management and operations of the company must be controlled by team members who are part of these minority groups. The business must also be a for-profit enterprise and physically located in the U.S. or its trust territories.
Benefits of getting certified as a Minority Business Enterprise
Getting an MBE certification can support your business strategy by opening up additional opportunities for you to secure funding and drive revenue.
Here are a few of the major advantages to getting your business certified as an MBE:
Network expansion: Connect with other MBEs for potential joint-venture and partnership opportunities. Take advantage of programs that get your business in front of potential customers and procurement professionals.
Education and business advisory: Get access to professional development programs and support to expand your business skill set, including resources like technical training, mentorship, and marketing assistance.
Federal contracts: Many federal agencies are required to give a certain number of contracts to certified minority-owned businesses. Certification means you can compete for these contracts and connect with advisors who can help you navigate the process. This can open up your business to new opportunities and important relationships you might not have found otherwise.
Access to funding: There are programs available across the country to help minority-owned businesses receive access to capital they might not otherwise be able to generate from their own networks. These programs provide grants and loans that can help you reach your business goals.
Incentivizes investment and partnership: Both state and federal tax benefits are available to other businesses that engage with MBE-certified organizations. There are also tax benefits for working with organizations that employ minorities. However, there are no tax benefits specifically for certified MBEs.
How to get certified as a Minority Business Enterprise
There are multiple ways to get an MBE certification. The most common programs include:
The National Minority Supplier Development Council (NMSDC)
The Small Business Administration (SBA)
State and local programs
There’s some overlap between each of these options, but it’s a good idea to understand the differences to get the most benefit for your business.
Getting certified through the National Minority Supplier Development Council
The National Minority Supplier Development Council (NMSDC) is considered the gold standard for ensuring supplier diversity in the private sector. This certification program is great for businesses that want to connect with private corporations to do contract work with them.
Alongside the MBE certification, the NMSDC offers opportunities for you to access financial and educational resources and expand your professional networks.
Key benefits of certification with the NMSDC
A business listing in the regional and national minority supplier database.
Networking opportunities with over 12,000 fellow MBEs.
Opportunities to reach and win contracts with over 1,400 large corporate members, including companies like Accenture, Apple, Bank of America, Delta Airlines, Google, UnitedHealth Group, Walmart, and Walt Disney Company.
Access to funding opportunities through their Business Consortium Fund, the Growth Initiative Program, and the Capital Manager’s Program.
Ongoing access to technical and leadership training.
How to apply for an MBE certification through the NMSDC
In addition to being at least 51 percent owned by minority individuals, the NMSDC requires that your business is a for-profit enterprise, and the management and daily operations must be done by minority ownership members. Here’s a full overview of their criteria for identifying minority-owned businesses to see if you qualify.
The NMSDC has an online application process through their website, but before you get started, you’ll need to get in touch with the regional affiliate that’s closest to your business’ headquarters. They will guide you through the application process and ensure you’re compliant with the standards.
The entire certification process can take up to 90 days to complete, and you’ll have to wait for final approval from both the board and committee members. If your application is approved, they’ll notify you by email and postal mail.
Application Fees for NMSDC Certification: Depending on your regional affiliate, fees can be between $350 and $1,200. Affiliates will classify your business based on your annual revenue and your fee will reflect your classification. For example, the Southern California Minority Supplier Development Council charges $400 for businesses that make less than $1 million in annual revenue and have the option to pay extra for an expedited application process.
Getting certified through the Small Business Administration
If you want to succeed in the public sector—winning contracts with federal, state, and local government bodies—you could benefit from the Small Business Administration (SBA) 8(a) Business Development program.
The federal government has a goal to spend at least 5 percent of its contracting dollars on businesses with the 8(a) designation. To take part in the 8(a) program, your business has to be at least 51 percent directly owned and controlled by U.S. citizens who qualify as socially or economically disadvantaged in the Code of Federal Regulations.
Key benefits of the SBA 8(a) designation
Ability to compete for public sector contracts.
Compete for contracts through additional socio-economic programs.
Access to an SBA Business Opportunity Specialist to help you navigate the federal contracting processes.
Opportunities to form joint ventures with other businesses through the SBA Mentor-Protégé Program.
Receive ongoing management and technical assistance, including business training, counseling, marketing assistance, and executive development.
How to apply for the SBA 8(a) program
You can apply for the SBA 8(a) program online through certify.SBA.gov. However, unlike the NMSDC’s regional affiliate structure, the SBA doesn’t offer application support. Keep in mind that it may take a significant amount of time and resources to put together an application yourself. There are several consulting firms available to hire to help you organize your documents and ensure that your application has a good chance of being approved. Before you dive in, the SBA also provides a preliminary assessment tool you can use to quickly see if the program is right for you.
A full outline of the steps you need to take to apply can be found on the Certify knowledge base. Here are some of the major requirements you need to meet to be eligible for the 8(a) Business Development Program:
You have to qualify under the SBA small business standards when you apply and throughout the nine-year program.
Your business cannot have previously participated in the 8(a) program.
You must have the financial capacity to perform federal contracts successfully.
You cannot owe any outstanding federal financial obligations.
Your business is owned by someone with a personal net worth of $250,000 or less.
The owner has an average adjusted gross income of $250,000 or less for three years.
The owner has $4 million or less in assets.
If your business is accepted into the program, you’ll receive a mailed letter within 90 days from the SBA informing you that your application was approved.
Application Fees for the SBA 8(a) Program: Application to the 8(a) program is free. Keep in mind that the time you spend applying is also a cost to your business. If you choose to hire a consulting firm to help you out with the application process, the cost for these services will vary by provider.
Getting certified through state and local programs
In addition to NMSDC and SBA certifications, there are also several MBE certification programs that are intended to help connect companies with state and local government contracts that are set aside for minority-owned businesses.
Some examples of state-level certification programs include:
You can find out if your state offers similar programs via this directory.
Look for local certification programs on your municipality’s website. Typically, these resources are found in the economic development section or certification section and list programs available for local minority-owned businesses.
Do women-owned businesses qualify as MBEs?
While the NMSDC doesn’t have certifications specifically for women-owned businesses, the Women’s Business Enterprise National Council (WBENC) is a non-profit organization that provides the most widely recognized certification for women-owned businesses in the country.
The benefits of being certified are similar to the NMSDC program, including access to a network of other private-sector companies and the potential to reach procurement executives at major organizations. Educational support and marketing assistance are also available.
To take advantage of the SBA 8(a) program, women-owned businesses still need to qualify as being economically disadvantaged under their criteria. You can take a look at the examples in this section of the Code of Federal Regulations to see if you qualify.
It’s worth noting that the SBA offers a Women-Owned Small Business (WOSB) Federal Contracting program. Again, this program is similar to the SBA 8(a) program in terms of requirements and benefits. If you are both a woman and qualify as an economically disadvantaged individual, you can be certified as an Economically Disadvantaged Woman-Owned Small Business (EDWOSB).
Historically, minority business owners have faced challenges in accessing business financing and winning large contracts. During the pandemic, the first round of the Paycheck Protection Program also presented issues with equitable distribution of PPP funds to minority small businesses.
As a certified MBE, you’ll have access to favorable contract opportunities, marketing assistance, and other valuable resources like business training and mentorship.
If you’re looking for more information on funding for minority-owned businesses, be sure to check out our guide to business funding for minorities, as well as our article Funding Alternatives and Resources for Minority Entrepreneurs.