Minority Business Enterprise - MBE Certification
Learn how to receive MBE certification through city, county, or state programs.
Definition of a Minority-Owned Business Enterprise (MBE)
For purposes of interested individuals considering certification, those included as part of minority group includes any United States citizen or permanent resident alien in which at least fifty-one percent (51%) is owned, operated and controlled by citizens or permanent resident aliens and can demonstrate membership in, one of the following ethic groups below:
- Black persons having origins in any of the Black African racial groups;
- Hispanic persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American descent of either Indian or Hispanic origin, regardless of race; or
- Asian and Pacific Islander persons having origins in any of the Far East countries, South East Asia, the Indian Subcontinent, or the Pacific Islands.
Context for MBE Certification
When I first started this work back in the late 1980’s we would offer management and technical assistance to minorities that were trying to market to the government, obtain SBA government-backed financing, do construction take off’s, becoming MBE certified or who were starting, acquiring, managing or operating their businesses. My role within the economic development agency was to provide business development and marketing services to our MBE clients which 90% of the time included facilitating the documentation required to become M/WBE certified and facilitating those essential connections with prime contractors via our business development services.
Prior to accepting this professional and great position I knew absolutely nothing about supplier diversity, MBE certification, set-asides, or utilization goals. I soon learned that there was a real need for the designation and found out that M/WBE stands Minority/Women-Owned Business Enterprises. This was an area that fascinated me and I wanted to learn everything I could about the significance of the certifications, why there was a demand for them, and how to maximize the value of being involved with the process.
I found that in some states, the two may be treated separately, and you may see Minority Business Enterprise (MBE) or Woman Business Enterprise (WBE) instead. In either case, it’s a certification issued by the state that provides developmental benefits to M/WBE businesses. I also found that at least 47 states, plus Washington D.C. and Puerto Rico, have state-level M/WBE development programs run by federal, state, local, and private organizations.
The next step was to find out why minorities and women had to be treated differently from other businesses that were owned by non-minorities. I also often wondered why minorities required so much management and technical assistance in these areas and why there had to be special programs or certifications to help minority businesses with the growth of their businesses.
I soon learned there existed many disparities over the last several decades, which made it harder for the M/WBEs to sell to the government, and as a result, the federal, state, and local governments throughout the nation found it best to create M/WBE programs and certifications that would increase the number of certified MBEs qualified to sell to the government, increase the number of contracts being awarded to M/WBEs and expand legal tools such as utilization tools to induce greater usage of M/WBEs simply because M/WBEs were not receiving their fair share of the government procurement contracts awarded to non-minority owned businesses.
The more I did the work, the more I learned and begin to see the bigger picture of why these certification programs with utilization goals are not only opportunities but also necessities. I found that nationally, it is estimated that government procurement represents about 10 percent of the Gross National Product (GNP), with state and local government spending accounting for more than half of all procurement dollars. Nationwide, minority firms account for about 17 percent of total businesses in the country but earn less than 3 percent of total sales and receipts. The situation is no better for women. Nationally, women own 28 percent of the businesses in the United States but generate only 4 percent of the sales and receipts.
Benefits of MBE Certification
Based on these facts the MBE certification is seen as a potentially powerful tool for governments to attempt to level the playing field by creating and enhancing economic and procurement opportunities along with general support for small businesses and targeted support for minority and women-owned businesses through various means, including awarding contracts to qualified MBE that have been certified by federal, state or local agencies.
These certification programs are an essential first step for any M/WBE business owner in cultivating relationships with government agencies as well as with corporate prime contractors that have government contracts because the certifications position your company to compete for contract awards that have utilization goals attached to them because of the federal, state or local procurement dollars attached to the awarded contract.
I recall how when my father decided to purchase a franchise paint store, and go after government contracting opportunities he sought out the Minority Business Enterprise Certification (MBE), in addition to the Veteran Owned and Operated Certification (VOSB) and also the Disadvantaged Business Enterprise Certification (DBE) to ensure he would be qualified to bid on various opportunities that may become available requiring set asides and utilization goals. My dad knew that some states have established overall agency-specific goals, or goals by product/service type for procurement from certain firms. He also knew that statewide M/WBE goals vary from 10 percent to 40 percent of procurement expenditures.
Lastly, he knew that regardless of race or gender ownership, there were even states that had goals for Small Business Enterprises (SBEs) and he wanted to ensure that his Benjamin Moore Paint Store would be listed in all of the applicable directories of M/WBE certified firms to allow federal, state, and local agencies, as well as private prime contractors to be able to easily find his firm once procurement opportunities became available to fulfill their MBE utilization and participation goals.
MBE certification goals indicate the percentage (in dollars) of a contract that must be performed by a certified woman or minority owned business. The goals may be met through an M/WBE prime contractor’s self-performance, a joint venture between an M/WBE and non-M/WBE firm or using M/WBE subcontractors. Generally, participation goals apply to contracts for standardized, professional and construction services contracts with a history of subcontracting in areas with M/WBE availability. Goals are not required for contracts that are not competitively awarded, are awarded to a nonprofit entity, or those contracts with preemptive state or federal goals much like the ones my father would participate in.
I recall how his certification and his team of professionals would always market his products and services to the various procurement and directories to ensure that purchasing agents knew about his products, his capabilities, and to ensure they had all of his updated contact information.
Now is a great time to get your documents in order and apply for the MBE certification. Corporations and governments across the United States look to our team for certified, qualified, and capable minority business partners to meet their contract utilization goals. Are you certified? If not, these certification programs are definitely meant to encourage minority and women business owners to certify with not just the federal, state and city government agencies but also to register with those prime private contractors and suppliers to take advantage of current and upcoming procurement opportunities and more importantly to gain access those billions of dollars awarded to businesses annually.
In addition, certification provides invaluable business resources and essential connections to ethnic minority owned businesses:
- It gives a leg up to MBE businesses that otherwise might not have the ability to compete with bigger players. By giving these businesses access to development assistance, they’ll have more opportunities and resources at their disposal.
- This can help your MBE business get government contracts that may not have been accessible before. If you have a catering company, for example, you might have the opportunity to cater a treasury lunch. If your company makes soap, you might be in the running to supply soap to a state office facility.
- Top corporations look for diverse and certified MBE suppliers.
- Certified MBEs have ongoing access to corporate executives, buyers, and decision-makers.
- Many corporate procurement opportunities are available only to MBE certified suppliers.
- Businesses with MBE certification have access to exclusive ‘certified-only’ bidding opportunities.
- MBE gain access to trainings and programs only available to certified MBEs.
- MBE certification is nationally recognized and allows for doing business in and around the United States.
- Many larger companies actually have supplier diversity programs to promote opportunities for diverse MBE suppliers to help diversify and strengthen the supply chains for those companies, and it can also lead to innovation across the board.
MBE Certification Process
Procedures usually require businesses to first register with a state’s secretary of state or department of tax and finance prior to applying for the MBE certification if the firm isn’t already an active business entity. The idea here is to ensure that the business has completed the Internal Revenue Service (IRS) SS4 form and obtained an employer identification number, and has legally formed a business and set it up as a Limited Liability Corporation, an S Corporation, C Corporation or Partnership.
The certification process usually involves a lengthy application form (sometimes submitted online) to collect information about a firm’s owner, products and services, finances, equipment, facilities and control of functions; supplemental documents to substantiate information represented in the application; and a scheduled site visit to verify the information and to ascertain that the business is under the daily control of a minority or woman owner. Many states require M/WBE firms to verify annually that they continue to meet the eligibility criteria of the program, without resubmitting full documentation. It’s also a great idea to stay ahead of this stage by updating your directory listing if your location of the business changes, or if any of your contact information changes – particularly if you move into a shared space lease situation with another firm.
There are many M/WBE programs in various states that provide for reciprocal and/or accelerated certification with other programs. Dual certification is usually provided for firms certified under the federal Disadvantaged Business Enterprise (DBE) program for transportation contracts funded by the U.S. Department of Transportation. In addition, several states have reciprocal certification programs with municipalities in their jurisdictions, other states in their regions, and/or statewide and national minority women’s procurement organizations.
Ultimately, most of these MBE certification programs are usually administered by a state’s department of administration or general services, where centralized procurement is handled. Occasionally, a program is administered by a stand-alone agency or is in the state’s commerce department or economic development agency, as it is in New York State, and by comparison, it’s administered out of the taxation in the State of New Jersey. Each state operates differently, and it’s a great idea to obtain as many certifications as possible throughout the United States once you’re ready to grow your business with government contracting opportunities.