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.
What are SBA Certifications?
For small businesses in the United States, achieving growth and competing in the vast market can be quite the undertaking. Many face stiff competition, not only from other small enterprises but also from large corporations. The U.S. Small Business Administration (SBA) recognizes these challenges and has established formal certifications to aid these enterprises in overcoming such obstacles.
SBA Certifications are official recognitions provided by the Small Business Administration. They play a pivotal role in ensuring that certain small businesses, especially those owned by disadvantaged individuals, women, veterans, and those in underutilized regions, can compete for federal contracts. The intent is clear: to level the playing field and give these businesses a fair shot at growth and success.
How Do I Qualify for an SBA Certification?
Some of the qualifications are different depending on which small business certification you are seeking, but generally, you must satisfy the following requirements:
Determining Eligibility
Before considering the certification process, small businesses must identify which certification they qualify for. The Small Business Administration (SBA) provides a Size Standards Tool. By using this tool, business owners can confirm if they’re eligible for small business certification or an SBA assistance program.
Self-Certification Process
For those who aim to certify only as a small business or a small disadvantaged business, the procedure is less demanding. Such entities can opt for self-certification when registering on SAM.gov. This registration is a necessity for businesses that are eager to avail small business set-aside opportunities provided by the federal government.
Application for Multiple Certifications
Certain small businesses might qualify for more than one certification. It’s not uncommon for a small disadvantaged business to also fit the criteria for a veteran-owned business. In such cases, they have the freedom to apply for both.
A beneficial approach is to fill out multiple applications concurrently. Although each certification may have its unique requirements, there’s often an overlap in the type of information needed. Details such as company financials and licensure are common across many applications. Leveraging software and employing management tools can be instrumental in streamlining this process, particularly if businesses are vying for several certifications simultaneously.
Timeline for Certification
The time frame to attain certification isn’t consistent across all agencies or organizations. As an example, the SBA generally aims to finalize decisions within 90 days. On the other hand, B-corp certification can span six to eight months. If any discrepancies arise in the application, or if the business doesn’t meet certain criteria, additional documentation might be necessary. This can further extend the processing time.
Reassessments and Recertifications
Achieving certification doesn’t signify the end of the journey. Businesses need to understand that certification isn’t permanent. Depending on the type of certification and the issuing body, recertification is typically required every two to five years. During each recertification interval, businesses must consistently meet eligibility standards and provide evidence supporting their compliance.
What Are the Different Types of SBA Certifications for Disadvantaged Businesses?
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 small business 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.
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
Minority-owned Business Certification
Aiming to support the integration of Minority Business Enterprises (MBE) into mainstream business, the National Minority Supplier Development Council (NMSDC) offers Minority-owned Business Certification. It boasts of a network that comprises over 12,000 certified MBEs, fostering business relationships with over 1,400 large corporate members.
To qualify, a business should predominantly (51%) be owned and managed by minorities. The definition of a minority, as per NMSDC, is an individual having at least 25% ancestry from Asian, Black, Hispanic, or Native American communities. The certification isn’t just handed over after a simple check. A thorough process involving screenings, interviews, and site visits ensures that only genuine businesses get certified.
LGBT Business Certification
Businesses belonging to the LGBTQ+ community have the National Gay and Lesbian Chamber of Commerce (NGLCC) advocating for them. Through their Certified LGBT Business Enterprise (LGBTBE) program, the NGLCC helps such businesses get better contracting opportunities.
To avail this certification, a business should be 51% owned, managed, and controlled by individuals from the LGBTQ+ community. Once certified, the validity lasts for two years, after which businesses can opt for recertification.
Small Disadvantaged Business Certification
The Small Disadvantaged Business Certification came into existence in 2008 courtesy of the SBA. It’s not the regular kind of certification where you apply and get approved. Businesses self-represent their status, with the main criteria being that the company should be owned 51% by disadvantaged individuals. These could be individuals who are socially or economically at a disadvantage.
It’s important to note that businesses with this certification may also be eligible for other SBA programs. A notable one is the SBA’s 8(a) Business Development Program.
Federal Certifications: Small Business Strategy
If you’re a small business looking to get into federal contracting, understanding small business certifications can give you a leg up. These certifications, supported by the government, help small businesses prove they’re reliable, make themselves more appealing in the market, and get access to contracts set aside just for them.
Getting certified means you’re showing the government you’re serious and capable. It also means you’re joining the government’s effort to spread opportunities to a wide range of businesses.
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.
