Growing a business is hard work—especially if you don’t have the resources you need. And if you belong to a minority or economically disadvantaged group, you could face added challenges due to your gender, location and economic situation. Luckily, the federal government offers help through Small Business Administration (SBA) certifications.
The SBA sets aside 23% of federal contracting projects annually for smaller, disadvantaged businesses. However, to be eligible to apply for the contracting programs you must be certified for one of the four programs the SBA offers to different groups, including minorities, veterans, and women.
There are many certifications to consider, and the first step is figuring out which one makes the most sense for your business.
How do I qualify for an SBA certification?
Some of the qualifications are different depending on which certification you are seeking, but generally, you must satisfy the following requirements:
- Your business must be “small.” Use the SBA’s Size Standards Tool to learn if you fit into this category.
- A US citizen who is part of a disadvantaged group must own or control at least 51% of the business.
- Management and operations must be carried out by a disadvantaged person who is a US citizen.
- Some certifications require the owner to also be socially or economically disadvantaged.
What are the different types of SBA certifications?
There are several categories of SBA certifications. Let’s take a look at the different programs, what they offer, and their unique qualifications.
8(a) Business Development program
At least 5% of federal contract dollars is earmarked annually for businesses certified through the 8(a) Business Development program. Businesses can apply for the certification once, and if approved, they receive 9 years of development assistance and can compete for contract jobs.
During the 9 years you can participate in mentor programs, undergo business ownership training, and receive counseling to help advance your entrepreneurial career.
You must have a net worth less than or equal to $750,000 and an average adjusted gross income of $350,000 or less for three years. Your business must also demonstrate good character and show potential for success in these government contracts.
HUBZone SBA certification
The second SBA certification for minority groups aims to award 3% of federal contracts to ventures located in historically underutilized business zones—known as HUBZones.
A HUBZone certification gets you limited competition for certain government contracts and preferential consideration in other full contract competitions. You also get a 10% price evaluation preference in these opportunities.
The program also gives you the opportunity to compete for “set-aside contracts.” These are broken into two categories:
- Competitive: When at least two small businesses can satisfy the contract requirements, the government sets it aside exclusively for small businesses. This usually happens for all government contracts under $150,000.
- Sole source: These contracts can be issued without a bidding process. This usually happens when a single business can fulfill the contract.
To get HUBZone certified, your headquarters and at least 35% of your employees must be located in a HUBZone. You’ll need to re-certify for the program once a year, and a full review will be required every 3 years.
Service-Disabled, Veteran-Owned small business (SDVOSB)
If you qualify for the SDVOSB SBA certification, you can apply for the 3% of set-aside contracts, receive business training and financial assistance, and access counseling services for your business needs.
As the program’s name implies, you must have a service-connected disability to participate. Getting certified is fairly easy, all you have to do is update the socio-economic status section of your business profile at SAM.gov. The certification is good for 3 years.
Woman-Owned Small Business (WOSB)
Women-owned small businesses who are WOSB-certified gain access to the 5% of federal contracting projects that are set aside for the program each year and come with limited competition.
Recently, the SBA improved the certification process to make it easier for women-owned businesses to get certified. All you need to do is visit the SBA’s free self-certify site to determine if you’re eligible and complete the process. The WOSB certification requires a renewal every 3 years.
Note: The former online self-certification process is still an option, but only through October 15, 2020.
You can also use a third party to get certified, and can choose from one of the approved organizations:
- El Paso Hispanic Chamber of Commerce
- National Women Business Owners Corporation
- U.S. Women’s Chamber of Commerce
- Women’s Business Enterprise National Council
Taking advantage of the SBA certification benefits
If you qualify for any of the programs we discussed, it’s in your best interest to get certified and begin reaping the rewards of your new status. Take part in the mentor programs, training, and yes, government set-aside contracts.
Once you’re certified you can use the certification logo on your marketing materials. This gives you a leg up when it comes to customer appeal.
One last note: The perks may be great, but they come with renewal dates. Remember to pay attention and prevent any lapse in your certification, or you’ll lose those great business development benefits.
Remember: This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.
