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Benefits Certification Minority Owned Businesses

Companies owned by members of a racial, ethnic minority, women qualify for the benefits of a Minority Owned Business certification. Read about the benefits here.

The benefits of certification as a woman or minority owned business can make a huge difference in the success of a new enterprise. In the United States, government agencies reserve some contracts for companies that are owned by members of a racial or ethnic minority, women, the disabled, or that operate in economically disadvantaged areas. Similarly, many private sector businesses offer preferred status to vendors owned by members of disadvantaged groups.
Both the government and private sector businesses have established certification programs that evaluate and validate the legitimacy of a business's claim to be owned by a member of a disadvantaged group. Certification requires an extensive investigation into a company's ownership, finances and operations. As part of this process, a business under consideration for certification will need to prove that a member of a racial minority, or a woman, owns 51 percent of the business.
While some business owners may find this process onerous, many feel that the benefits of certification far outweigh the challenges involved in completing the process. Since these benefits include significant financial assistance and preferences in gaining contracts and establishing partnerships, certification can make the difference between a small business that grows into a larger enterprise and a small business that stays small or, even worse, fails.

Here are some of the advantages and disadvantages of undergoing certification:





Earning certification automatically qualifies a business for consideration of both government and private contracts that have been reserved for businesses owned by members of disadvantaged classes.

Some small business financial products, such as loans with more favorable terms, are only available to certified businesses.
Certification adds legitimacy to a company's claims of being minority-owned, woman-owned or owned by a member of a disadvantaged group.


The financial and business advantages of certification provide significant support to a business in its most vulnerable years of early growth. These advantages also can be crucial to the survival of a business during periods of economic recession, when new contracts and opportunities can be scarce.





The certification process is multifaceted and can take a fair amount of time to complete. Depending on the certifying agency, business owners may have to complete preparatory courses, significant amounts of paperwork and may also have to host a visit from an investigator from the certifying agency. The cost of certification can be quite expensive.


Depending on a business owner's goals, multiple certifications may be advantageous. This increases costs, time spent on complying with certification requirements and may require a different set of compliance standards for each certification.



A business may have to hire a compliance specialist to ensure continued eligibility.


While business certification can be an arduous process, it also makes sense for many entrepreneurs and owners. Access to government contracts, favorable financing options, and preferred vendor relationships greatly enhance a small company's chances of success. Owners and CFOs who are ready to take their companies to the next level should investigate the practicalities of earning certification through the Minority Business Development Agency as well as the National Minority Development Council.



This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.




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