Categories
Business Planning

Minority-Owned Business Certification – Why it Matters

Minority-Owned Business: How to Get Certified & More

Being a minority business owner used to be challenging. Most are at a disadvantage when trying to access capital, and networking opportunities were harder to come by for business growth.

Luckily, things are changing.

It’s now easier than ever for a minority-owned business to succeed, thanks to several assistance programs and government initiatives available to them. They just need to become certified as a minority business owner to benefit from these programs.

In this article, we’ll talk about how to get minority certification and what it will mean for a business owner.

What is a Minority-Owned Business?

A minority-owned business or minority business enterprise (MBE) refers to any company which is majority-owned (having 51% or more shares) and managed by US citizens of select ethnic minorities. Specifically, owners need to have a 25% ethnicity on any of the following racial groups: African, Asian, Pacific Islander, Hispanic, Hasidic Jew, or Native American.

Minority-owned businesses represent a sizable portion of the US economy, with around 11 million companies in every industry sector. Collectively, they generate $1.8 trillion in revenue and provide jobs to more than 6.3 million Americans.

Indeed, the contribution of minority businesses to the economy is so substantial that the US Department of Commerce has an agency specifically to help these kinds of companies.

Called the Minority Business Development Agency (MBDA), the organization aims to improve the competitiveness of a minority corporation by providing access to financing, networking, and marketing opportunities. 

How to Get a Minority Business Certification

While most minority enterprises prefer to self-identify, it’s beneficial for them to be certified by government or state agencies. A minority certification gives such businesses access to programs and opportunities that can give them a competitive advantage.

One of the most prominent certifications is by the National Minority Supplier Development Council (NMSDC). It’s a trade group that helps connect minority-owned businesses with top corporations in America eager to work with them, from Microsoft to Marriott.

To become eligible for minority-owned business certification, an owner needs to have documentation showing proof of their minority status as a majority owner of the business. Application is done through any of the 37 regional councils of the NMSDC. They will then do a site visit and interview as part of the application.

If an application is rejected, the owner has 30 days to appeal for a re-evaluation. If it’s still rejected, they can re-apply the following year.

There are other certifications a minority-owned business can explore. To name a few, these include the 8(a) Business Development Program by the Small Business Administration (SBA) and the Disadvantaged Business Enterprise (DBE) certification by the US Department of Transportation.

Benefits of Being a Minority-Owned Business

Far from being disadvantaged, a minority business can enjoy a wide range of benefits while operating in the United States. 

Government agencies prefer working with minority enterprises because it’s in the public’s interest that they do. Some states, for instance, require that a portion of the work on public construction projects be awarded to minority-owned or women-owned businesses.

The result is that there’s a lot of minority-owned business contract opportunities available with the local and federal government. In 2019 alone, the MBDA helped facilitate more than $3.1 billion in minority government contracts.

The private sector is also inclined to transact more with minority-owned firms. These companies understand that to sell to minority customers effectively, they have to do business with them first. 

Lastly, minority-owned businesses can enjoy several support programs to help with business growth. Groups such as MBDA and the NMSDC’s Business Consortium Fund provide management training, consulting, and loan programs.

How and Where to Get Minority-Owned Business Contract Opportunities

There are several online portals and resources an owner can check out for minority contract opportunities in their area.

For private sector contracts, the database of the NMSDC is an excellent place to start. A business can even mention their NMSDC certification in all marketing materials or press releases to attract firms looking for minority suppliers.

If a business owner wants to become a supplier for the federal government, he or she needs to register first with the System for Award Management, or SAM. It’s free and allows searching through public projects that they can bid on.

The US General Services Administration (GSA) is another agency for contract opportunities. The GSA acts as the centralized procurement hub for other federal agencies, so there are plenty of projects at any given time. There are even projects listed that need to be awarded to minority businesses.

Finally, minority businesses can go to the Small Business page of the USA.gov website, and search through all government programs that they qualify for.

We’re Here to Help

Today, a minority-owned business has more contract and business opportunities than ever before. The question now is – are your finances ready to take them on?

If you’re looking to finance your operations with an upcoming bid, L3 Funding can help you with flexible merchant funding products at competitive rates. Schedule a one-on-one consultation with us today.