How to get certified as a minority-owned business
Key takeaways
- Minority-owned businesses are majority-owned, typically 51 percent or more, by members of a minority community.
- Getting certified as a minority-owned business can open the door to more business resources and development opportunities.
- There are several types of certifications for minority business owners, including MBE certification, SBA minority-owned business certifications, and certifications through state and local agencies.
If you are a member of a minority community who owns a business, you may be considering getting certified as a minority-owned business. Minority-owned businesses often receive less business financing and grant funding than their competitors. According to SBA statistics, women-owned businesses make up about 51 percent of small businesses but typically only receive 30 to 33 percent of SBA 7(a) loan funding.
Getting a minority-owned business certification can be a helpful way to get access to more funding opportunities and business resources.
What is a minority-owned business?
A minority-owned business is usually defined as a business that is majority-owned — at least 51 percent or more — by a member of a minority community. These communities can include specific racial or ethnic communities, gender communities and sometimes veterans or family members of veterans. Typically, the owner of this type of business is involved in the business’s day-to-day operations, but eligibility will vary between organizations.
Why should you get certified as a minority-owned business
Getting a minority-owned business certification has its perks, including access to extra business resources or business development programs. Certification can also help get small business loans or grants.
Since minority business owners often face discrimination in business lending, giving access to a smaller pool of resources can be a helpful way to make funding more accessible for minority business owners.
How to get a minority-owned business certification
Several agencies and organizations offer minority-owned business certifications. Each type of certification has its own specific requirements. They also provide access to different funding and resources. Here’s how to get a minority-owned business certification from some of the main agencies that offer it:
National Minority Supplier Development Council
The National Minority Supplier Development Council (NMSDC) was established in 1972 to help Asian-Indian, Asian-Pacific, Black, Hispanic and Native American-owned businesses have equal access to wealth-building opportunities through entrepreneurship. The NMSDC offers a certification for minority business enterprises (MBEs). These businesses are at least 51 percent owned by someone who falls into one of the five minority communities the NMSDC serves.
To get an MBE certification, businesses must apply through the regional NMSDC closest to their company’s headquarters. The application can be completed online.
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- Business owners must be able to show that they are at least 25 percent Asian-Indian, Asian-Pacific, Black, Hispanic or Native American
- Must be 51 percent or more owned by a qualifying minority group member
- The business must also have an owner who is a U.S. citizen
- Be for-profit
- Management and daily operations must be practiced by the qualifying minority ownership member(s)
U.S. Small Business Administration
The U.S. Small Business Administration (SBA) has multiple programs to help minority-owned businesses and businesses operating in underserved communities. Businesses can get certified to be eligible for the program. You can get an SBA minority-owned business certification through these two key SBA programs for minority-owned businesses:
8(a) Business Development Program
Businesses owned by individuals who are economically or socially disadvantaged can apply for minority-owned business certification through this nine-year program for business development, networking and mentoring.
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- Businesses must be categorized as a small business
- Not previously participated in the 8(a) program
- At least 51% owned by U.S. citizens who are socially and economically disadvantaged
- Owners must have a personal net worth of $850,000 or less
- Demonstrate good character
- Demonstrate the potential for success
HUBZone
This certification is for businesses operating in historically underutilized business zones, and participating in the program helps fuel their business.
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- Businesses should qualify as small businesses
- Have their main office in a HUBZone
- Have at least 35% of its employees residing in a HUBZone
- Be at least 51% owned and operated by US Citizens, a Community Development Corporation, an Alaska Native Corporation, a Native Hawaiian corporation, a Native American tribe or an agricultural cooperative
According to the SBA’s lending report, as of October 18, 2023, 49 percent of 7(a) loan approvals have gone to white-owned businesses, and 32.8 percent of funds have been approved for Black-, Hispanic-, Asian-, Native American- and Alaska Native-owned businesses. Eighteen percent of loans approved have gone to those who did not provide their race.
That said, even with racial disparities in SBA loan funding, they are worth considering if a business has trouble securing traditional financing.
Disadvantaged Business Enterprise program with the U.S. Department of Transportation
Another federal agency offering certifications for minority-owned businesses is the U.S. Department of Transportation (DOT). It offers certification through its Disadvantaged Business Enterprise (DBE) program.
The DBE program aims to solve discrimination issues for all its transportation-related contracts. They do this by trying to give businesses owned by socially and economically disadvantaged individuals a fair shot at securing contracts for federally funded transportation initiatives.
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Qualifying for the DBE certification requires that a business meets the small business size standards and is owned and operated by an individual who is a part of a socially and economically disadvantaged community.
Local and state government certifications
State and local governments may also offer their own minority-owned business certifications that qualify these businesses for certain funding or business resources. Research state or local agencies for minorities in your area to find more local certifications. You could also reach out to your state’s small business association.
Resources for minority-owned businesses
Getting certified as a minority-owned business can also be a pathway to getting financial assistance through grants or loans specifically allocated for this type of business. There are both federal and private grants earmarked specifically for minority businesses.
For help finding minority-owned business certifications or grants that fit your business best, look to business resources like:
Bottom line
Getting a minority-owned business certification can help level the playing field for minority business owners. There are several ways to get certified. Look into all the options to see which certifications you may qualify for and provide you with the most beneficial resources for your business.
Frequently asked questions
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MBE stands for Minority Business Enterprise. Official MBE certification can be obtained through the National Minority Supplier Development Council. This certification is available to qualifying businesses with an owner who is at least 25 percent Asian-Indian, Asian-Pacific, Black, Hispanic or Native American.
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Typically, a business is considered minority-owned if it is at least 51 percent owned by an individual who is part of a minority community. These communities may include socially or economically disadvantaged groups that qualify through their race, gender or other factors.
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Being a minority-owned business can provide special opportunities for resources and business development. It can also be a way to access government contracts or funding.
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