Each year, the federal government and many U.S. corporations set aside a percentage of their annual contract budgets exclusively for minority-owned businesses, also known as minority-owned business enterprises (MBEs). Once certified, MBEs gain exclusive access to lucrative contracts at the federal, state, and local levels.
In this article, we’ll introduce you to the Small Business Administration’s (SBA) Federal Contracting Program, and the National Minority Supplier Development Council (NMSDC) certification process.
We’ll also define the criteria for qualifying as a minority-owned business, where to apply, and the necessary documents to complete the application process. Lastly, we’ll direct you towards a list of 2022 grants currently available to MBEs.
In This Article:
- What is the SBA Federal Contracting Program?
- Who is Eligible for Minority-Owned Business Certification?
- Why You Should Certify Your MBE
- How to Certify with the National Minority Supplier Development Council (NMSDC)
- Top 2022 Grants for Minority-Owned Businesses
The SBA’s Federal Contracting Program
The SBA’s Contracting Program is designed to provide greater access to federal opportunities for minority-owned businesses, large and small, awarding 5% of its budget annually to MBEs.
Certified MBEs are given further preferential treatment when bidding against an equally qualified non-certified MBE. That’s approximately $5B in federal funds looking to be spent.
Who Is Eligible to Certify as a Minority-Owned Business
Establishing your business’s minority eligibility consists of a combination of document reviews, screenings, interviews, and on-site visits. To qualify, an MBE must meet the following criteria:
- Owned and operated by U.S. citizen(s)
- Be at least 51% minority-owned, managed, and controlled
- Belong to a minority group who is at least 25%:
- Asian-Indian
- Asian-Pacific
- Black
- Hispanic
- Native American
- Be a for-profit entity located and operated within the United States
- Minority owner(s) must be involved in long-term business planning
Why You Should Certify Your Minority-Owned Business
Recent changes to the Small Business Act make certification mandatory for any business applying for sole source and set aside contracts. Moreover, Federal Acquisition Regulations stipulate that any socio-economic programs take precedence in contracts worth more than $150,000.
This is where certification really benefits and supports your minority-owned business.
When a government contract receives multiple bids at fair market price, the grantor must first consider certified MBEs over their non-certified counterparts.
How to Certify Your Minority-Owned Business With The National Minority Supplier Development Council (NMSDC)
You can certify your business with the SBA or other certifying entities, however, many MBE’s apply through the National Minority Supplier Development Council (NMSDC). Considered the gold standard of MBE certification, the NMSDC is the largest certifying body for minority-owned businesses in the U.S.
NMSDC certifications are accepted at the federal and state level and provide preferential access to its network of over 1,400 U.S. corporations.
Applying for Minority-Owned Business Certification
After qualifying as a minority-owned business, applying for NMSDC certification is relatively easy. Keep in mind, you must apply and register in person at the nearest regional NMSDC affiliate.
What Documentation Do I Need to Certify as a Minority-Owned Business?
Getting your paperwork together is the first step to certification. And, there’s lots of it. We’ve compiled the Big List of documents you’ll need to get started. We’ve also included a subset of specific documents based on your business entity.
You'll also need to make an electronic, PDF files of all the supporting paperwork you just compiled, and save it to a thumb drive, (or other USB-enabled media) before heading to your regional NMSDC affiliate.
Lastly, you'll be charged a non-refundable application processing fee based on your annual gross revenues to complete the process.
The Application Process
Here’s a rough outline of the NMSDC process for certifying your minority-owned businesses. Start to finish, the process takes approximately three months to complete.
Begin the process:
- Complete the online application at an NMSDC affiliate location
- Pay the application fee, online, using a credit card
- Upload your supporting documents to the NMSDC dashboard (at the affiliate location)
- Schedule an onsite visit to your business with an NMSDC Certification Specialist
Once the application is received:
- The application is reviewed for completion by the local affiliate, then forwarded to NMSDC’s board for approval or rejection. If approved, applicants receive notification via email, and can immediately begin applying for grants and contract opportunities for MBEs.
- If rejected, there is an appeal process.
Top 2022 Minority-Owned Business Grants
Once you’ve certified your minority-owned business enterprise, it’s time to capitalize on that hard work. Skip has compiled a starting point to search for grants set aside specifically for MBEs.
Grants.Gov
Find information on thousands of grant programs across the country including set-aside contracts for MBEs. To apply, you must:
Minority Business Development Agency
The nation’s sole lender dedicated exclusively to funding certified MBE’s, the Minority Business Development Agency (MBDA) is a department of the U.S. Department of Commerce.
As their name suggests, their purpose is to promote the growth of MBEs by connecting them to federal and private contract opportunities, as well as resources for financing.
Contact your local MBDA for more information.
National Minority Supplier Development Council
As mentioned previously, not only does the NMSDC certify MBEs it also operates the Business Consortium Fund (BCF).
This non-profit business development program offers advisory services and financing programs for its members. Known as a “difference maker” BCF finds creative ways to help small businesses unable to obtain conventional funding.
National Association for the Self-Employed
The National Association for the Self-employed (NASE) is a non-profit organization that provides educational resources, and monetary grants up to $4K throughout the year. To apply for any of the NASE grants, you must be a member in good standing.
Grant applications are accepted every month throughout the quarter, and reviewed the first month after receipt. Recipients are awarded after all compliance documents have been received by the NASE
What you need to apply:
- A business plan
- An outline of your identifiable need
- Detailed use of grant proceeds
- How the grant will satisfy a business need
- The grants impact to your growth and success
SBA 8(a) Business Development Grant
The SBA 8(a) Business Development Program is an additional grant program reserved for any disadvantaged business, women- or minority-owned. 8(a) classification provides access to training and technical assistance for native and indigenous people, including Alaska Native corporations, Indian tribes, Native Hawaiian organizations, and Community Development Corporations.
Any company meeting the 51% minority ownership criteria is a likely candidate for SBA’s 8(a) classification. However, before you can participate in the program, you’ll need to obtain your certification as a minority-owned business first.
Here’s how to apply:
- Determine your eligibility
- Review "Application Tips for Success Guide"
- Schedule an appointment with your local SBA district office, or Procurement Technical Assistance counselor to review documents and determine eligibility
- Register your business with SAM.gov
- Apply for 8(a) certification
If your application is accepted as complete, the SBA has 90 days to process it and make their decision. Once your business is certified as 8(a), it will appear in your SAM profile, as well as the Dynamic Small Business Search database, showing approval — and exit dates — for the 8(a) program.
📌 Note: Participants in the SBA’s 8(a) program must maintain their eligibility and certification on an annual basis. Each participant must submit specific supporting documentation to their SBA District Office. See the SBA’s Annual Review Checklist for more information.
Operation Hope Small Business Empowerment Program
Operation Hope Small Business Empowerment Program is an eight-week training course designed to equip and empower underserved entrepreneurs with the necessary skills to succeed in business.
Operation Hope’s graduates gain access to funding, training, personal development, access to professional services, as well as financial counseling offered at no cost to our clients.
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