Many organizations are committed to supporting members of minority groups. Entities from the government to large publicly traded corporations are attempting to address disparity among different businesses by awarding a certain percentage of contracts to minority-owned businesses. Winning many of these contracts requires formal certification. Unaware of the benefits of being a certified minority-owned business, some small business owners are leaving money on the table. Learning more about certification can increase your competitiveness and set your business up for future growth.
Who Qualifies?
You may be familiar with the term Minority Business Enterprise, or MBE, but unsure if your business qualifies as minority-owned. What if you share ownership or are unsure if your personal background counts? It usually depends upon the program you are applying to. The largest national certifying body is The National Minority Supplier Development Council (NMSDC). It defines a minority-owned business as one that is at least 51% minority-owned and daily operations “must be exercised by the minority group members(s).” A member of a minority group is one who is at least 25% African American, Asian, Native American, or Hispanic.
Other minority-owned business certifications may have differing or additional qualifications. For example, the U.S. Small Business Administration 8(a) Program requires proof of individual economical and social disadvantages to qualify. This involves specific caps on the amount of income and net worth of an individual. Other MBE programs run by individual states, like Indiana, have a different application process than the NMSDC.
Other Opportunities
Certification as a minority-owned business makes you more competitive when seeking contracts and clients. There are also loan and grant opportunities that you are only eligible for if you are a certified MBE.
One of the benefits of being a certified minority-owned business is that there are specific lending opportunities for this type of business. Some programs, like SBA Community Loans, were developed for underserved markets and allow a smaller amount of collateral to qualify.
Other funding options including microloans, fixed-cost financing, or loans that were developed for specific minority communities. State and municipal initiatives also exist to help MBE’s but vary widely depending on availability depending upon where you live.
Alternative Finance
Certification as a minority-owned business can move your business forward. The certification process can be lengthy, sometimes requiring in-person interviews or even disclosure of spousal tax returns.
In the meantime, alternative lending opportunities can help your business overcome short-term obstacles or invest in the future. Flexible funding doesn’t require a complex application process. Businesses that have been around for at least six months and that generate at least $100,000 in annual revenue are generally pre-approved.
Extended Opportunities
One often-overlooked benefit of being a certified minority-owned business is the networking opportunities. NMSDC has 23 regional affiliates, which help certify MBE’s. While most of these are in the eastern portion of the country, different corporate members have offices across the nation. This makes it easier to build your network and connect with potential clients once you gain certification.
Learning about the opportunities available to minority business owners can set up your business to compete long-term in the local and national stage.
Sources:
https://www.uschamber.com/co/run/business-financing/certification-guide-for-minority-owned-business
https://reliantfunding.com/why-reliant-funding/
https://www.in.gov/idoa/mwbe/minority-and-womens-business-enterprises/certify-your-business/
