Minority Owned Business Certification

The federal government has no minority owned business certification program. HUBZone is not a minority program, but a geographic program. SBA 8(a) certification which is often thought to be a minority owned business certification program, is actually a socio-economic program. Then other programs are marginal like veteran owned, well, that is more about service open to all who served. Women owned preference is the closest on paper to a minority preference program.

See, the issue stems from the political quagmire race can become. The federal government does not want to single out businesses just based on race, as that is discriminatory to those businesses that cannot participate in the minority programs. Reverse discrimination is the term. Odd, the federal government does not want minority set-asides but they have a whole agency called the Minority Business Development Agency. The difference is that the MBDA just doles out advice, the set-asides dole out cash. Which one would you rather have?

So, why is the SBA 8(a) certification considered to be a minority owned business certification program? Because the primary qualifiers for the program is to be a socially AND economically disadvantage business. Let me start in reverse. Economically disadvantaged is a numbers qualifier. Qualified means those whose net worth is less than $250,000. Easy enough to determine, and I would speculate that if you could answer to what your net worth is right now you would probably not qualify. And if you don't know your net worth, you probably will qualify. Socially disadvantaged is where it gets fuzzy. Socially disadvantaged is automatic if you are a member of a pre-determined ethnicity. Those pre-approved ethnicities are: Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans. The MBDA also includes Hasidic Jews in its list of ethnicities it serves, but the 8(a) program is a SBA program. Still, I would feel safe in saying they also would qualify automatically.

Here is the good news if you are not on the approved ethnicities list- if you can show you are socially disadvantaged you can still qualify! I know of an 8(a) woman-owned business who qualified by virtue of being a woman. It's not an easy road, but it can be done. The government wants businesses pursuing 8(a) to show 1). a "distinguishing feature" of your social disadvantage. This could be race, physical handicap, gender, and probably even dress (again think Hassidic Jew or maybe Mennonites or the Amish). 2). Every applicant has to provide a social disadvantage narrative, but not being in the approved list means that this narrative is all the more important. What the SBA wants on the narrative is direct anecdotal evidences where you and your business were discriminated against by virtue of your "social disadvantage." If you are not on the "approved by race" list it is up to you to make the case, but it can be done.

Non-Governmental Certification

There are a number of minority owned business certifications outside of the federal government. Many of them do have reciprocal agreements with each other and some will accept SBA 8(a) certification automatically. However, the most profound certification is from the National Minority Supplier Development Council (NMSDC) or more accurately the regional Minority Supplier Development Councils. These regional councils will do the certification but also have association with the national council. Excitingly, these regional councils are quite powerful as it concerns opening corporate doors to minority businesses.

This minority owned business certification will not only help with regional and national corporate business but can assist with governmental. State and local governments may have arrangements for certified businesses. This certification while having no official designation in federal procurement, may sway purchasing officers who would like to help a MBE. Especially helpful when a business has not acquire or already graduated the 8(a).