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Guide to the Certification Process for Minority-Owned Business

Companies owned by women or members of racial or ethnic minorities may qualify for the benefits of a Minority-Owned Business certification.

There are many benefits to becoming certified as a minority-owned business, including the marketing value and the opportunity to qualify for the disadvantaged business enterprise (DBE) program through the U.S. Environmental Protection Agency (EPA). However, for a business to become eligible for these benefits, they must first complete the EPA minority business enterprise (MBE) certification process.

Who can be certified as a minority-owned business?

To qualify as a minority-owned business or MBE, a business must be at least 51 percent owned or controlled by what is considered a socially and economically disadvantaged individual or individuals. In addition, the individual(s) must have an initial and continued net worth of less than $750,000. The groups that qualify by ethnicity are:
- African Americans
- Native Americans
Hispanic Americans

Asian Pacific Americans

United States citizens whose heritage includes at least 25 percent of a qualified minority group are eligible for certification. Supplying documentation to support a claim as minority status is required.


The minority-owned business certification process

To become certified, a business must submit an application through one of several organizations the EPA has approved to qualify businesses for entrance into the DBE program. These include:

- Small Business Administration (SBA)

- Department of Transportation (DOT)

- Tribal, state and local governments, or private company certifications that meet or exceed EPA certification standards

The EPA also can certify a business; however, they will only accept applications from businesses that have been denied by one of the other approved organizations.

The application process generally requires those seeking certification as MBEs to fill out a standardized application detailing the financial and legal standings of the business. Those who own and control the business also will be required to provide similar information regarding their personal finances and any legal issues. An affidavit must be signed, and usually notarized, stating that the information provided is true and correct regarding financial and ethnic status. In addition, documentation must be provided that includes balance sheets, tax forms and other financial information regarding assets held by the applicant.

In addition to meeting the minority ownership and management criteria, an applying business is also required to demonstrate a "potential for success." That means that a business must have at least two years of operation before the time of application, and income tax returns for those years must be submitted in order to prove operating revenue. There are five conditions that must be met in order to waive the two-year requirement:

  1. The applicant has substantial experience managing a business.

  2. The applicant has demonstrated the technical experience necessary to execute a business plan with a reasonable likelihood of success.

  3. The applicant has access to sufficient capital to sustain operations and carry out the business plan.

  4. The applicant has a proven track record of successful performance on contracts from either governmental or nongovernmental sources within the business's primary industry category.

  5. The applicant has, or can demonstrate the ability to obtain, the equipment, facilities, personnel and any other requirements to fulfill business contracts.

Although the process requires a fair amount of paperwork and documentation, once submitted, most agencies make a decision within ninety days. This certification can provide minority-owned businesses with many advantages that make it well worth the time and effort.

Women-owned businesses

Women-owned businesses fall under a similar heading as minority-owned businesses. In order to qualify for certification as a woman-owned business, a woman must own, at minimum, 51 percent of the business. There are, however, a few other criteria that must be met. In addition to an ownership majority, a woman also must be actively involved in the daily management of the company and hold the highest position within the company. It's recommended that a venture mostly owned and actively operated by a woman be in business for at least six months, and it is required that the female majority owner also is a citizen of the United States. The Women's Business Enterprise National Council offers a wealth of valuable information for female-led businesses seeking guidance in the area of becoming certified as a woman-owned business.


Cadence Bank's Small Business products and services can help your growing business succeed financially.
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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