If you own or want to start a business and you also happen to be female or a member of a minority group, you may want to seek special certification for your company.
Being officially recognized as a woman- or minority-owned business typically comes with a number of advantages, including eligibility for corporate and government contracts, more funding opportunities, as well as access to business counseling and other assistance.
Read on to learn what it means to be certified, plus the steps you need to take to get your company registered, whether you’re just starting out or have been in business for many years.
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How to Know if You Might Qualify as a Minority- or Woman-Owned Business
A good first step to starting a minority- or woman-owned business is to make sure your business qualifies as one.
If you’re planning on certifying as a woman-owned business, you’ll likely need to meet the following qualifications:
• At least 51% of the organization must be owned, operated, and run by one or more women.
• The women who own and operate the business must be U.S. citizens.
• A woman must be in charge of the daily processes and operations in the company.
• One or more of the women owners must control the management of the organization.
To be eligible for the Women-Owned Small Business (WOSB) Federal Contract program, you’ll also need to be considered a small business according to the Small Business Administration (SBA), which offers this online size standards tool.
If you’re applying for a minority certification, your business will likely need to meet these criteria:
• At least 51% of the organization must be owned, operated and run by one or more minority members.
• The minority owner must be a U.S. citizen.
• The owner must have someone who is at least 25 percent Hispanic-American, African-American, Asian-America, Native American, Pacific Islander, or native Alaskan.
• The minority owner must have paperwork to prove their background.
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Steps to Starting a Minority- or Woman-Owned Business
If you’re starting a new minority- or woman-owned business, there are a number of steps you’ll likely need to take before applying for certification. These include:
• Nailing down your business idea
• Writing a business plan
• Registering your business name
• Choosing a legal structure for your business
• Registering for federal, state and local taxes
• Getting any necessary business licenses or permits
If your goal is to get certified as a minority- or woman-owned businesses, it can be smart to keep the qualifications listed above in mind as you plan, structure, and get your business off the ground. If you’re looking for capital for your new venture, you may also want to explore small business loans for startups.
While certification programs typically require companies to have one to two years of business activity before they can apply for minority or women-owned status, some will consider newly formed entities.
When you’re ready to apply for certification, these steps can help you navigate the process.
1. Choosing Your Preferred Organization
You can apply for minority- or women-owned status through several different organizations. These include:
• The National Minority Supplier Development Council (NMSDC), which offers certification as a minority business enterprise (MBE)
• The Small Business Administration (SBA), which offers Women Owned Small Business (WOSB) certification.
• The National Women Business Owners Corporation(NWBOC), which offers Women Business Enterprise (WBE) certification
• The Women’s Business Enterprise National Council (WBENC), which offers Women Business Enterprise (WBE) certification
WBE certification opens up opportunities in the private sector, whereas WOSB certification allows you to bid on government contracts.
If your business is primarily involved in government work, another option is to pursue certification through a state or local agency. You can check your city’s official website to see if it has certification programs.
2. Gathering the Necessary Documents
Once you’ve chosen an organization or agency, you can review the documents you’re required to submit for the type of certification you’re applying for.
To apply for minority business enterprise (MBE) certification with the NMSDC, necessary documents include:
• Fictitious business statement (also known as “doing business” as or DBA statement)
• Driver’s license
• Proof of U.S. citizenship
• Proof of ethnicity for owner(s)
• 2 years of federal business tax returns
• Current financial statements
• Business licenses
• Employer Identification Number
Documentation requirements for a WBE include:
• History of Business (explaining the start and history of your business, including when, where, why, with whom, and how the business was started/acquired, as well as an explanation of the primary business of the company)
• Professional and business license(s), if applicable
• Resumes of all owners, board of directors, and key management team
• Copy of current U.S. Passport, U.S. Birth Certificate, or Driver’s License
• Financial statements for the business
• Three years’ federal income tax returns (or, for businesses less than three years old, personal federal income tax returns)
Spending time in advance gathering the documents you’ll need can save you time in the application process.
3. Starting the Certification Process
Depending on the type of certification you’re seeking and the organization or agency you’re applying through, you can typically do the application online.
For WOSB certification through the SBA, you can either apply through approved third parties, such as the WBENC or WOSB, or self-register on the SBA’s website.
How to Apply to Become a WOSB
Here are steps you may need to take to become a WOSB:
• Apply for your D-U-N-S number from Dun & Bradstreet (D&B). It’s free to obtain. This number is used to establish your company’s D&B file, which can help potential partners and lenders learn more about your business and make more informed decisions about whether or not to work with you as a client, supplier, or partner.
• Set up an account with the System for Award Management (SAM). This is the official government site for contracting and more, and it’s free to register.
• Create your SBA Connect account. This account will make it easy to log into different SBA websites.
Once you’ve gotten your D-U-N-S number and registered for these accounts, you can apply to become a Woman Owned Small Business or an Economically Disadvantaged Woman Owned Small Business, depending on your financial situation.
4. Paying the Application Fee
After you’ve filled out your application and submitted all the necessary documents, you may need to pay a fee to officially submit your application.
Fees vary depending on the type of certification you’re seeking and the organization or agency you are working with, but they tend to run around $350 to $400.
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How Long Can It Take?
Once you submit your application, you can typically expect an on-site visit and interview. The certification and review process can take anywhere from one to three months.
Funding Options for a Minority Woman-Owned Business
Once you’ve gotten certification, there are specific grants and loans aimed at women or minority businesses, and these could provide the financing you need to launch or grow your business.
If you’re looking to raise capital for a women-owned business, you may also want to explore business grants for women, as well as minority women small business loans.
If you’re a minority entrepreneur, there are several minority small business grants, as well as loans available. Good resources include:
• Minority Business Development Agency
• National Minority Supplier Development Council
• The USDA Rural Business Enterprise Grant Program
The Takeaway
Getting certified as a minority- or women-owned business can give you access to a wealth of opportunities, plus support and resources to grow your company. Many state and federal agencies, as well as many corporations, allocate a certain percentage of projects and contracts to officially recognized minority and women-owned businesses.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
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