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Supplier Diversity Blog

The Definitive Guide for Minority-owned Business Enterprises

Minority Owned Businesses

Small businesses are the engine that drive the U.S. economy, and Minority-Owned Business Enterprises (MBEs) fuel a large portion of that engine. The activities of the minority business community generate significant economic benefits for not only the local communities in which they exist, but also the nation as a whole.

There were eight million minority-owned firms in the U.S. as of 2012, according to U.S. Census Bureau data, an increase of 38.1 percent over 2007. Minority-owned firms represented 28.8% of all U.S. firms in 2012.

Comparative growth paints an even brighter picture. Between 2007 and 2012, receipts for minority-owned firms climbed from $1.0 trillion to $1.4 trillion (34.7 percent).

It’s obvious that minority-owned businesses have been a boon to our economy in the past and will continue to play an integral role as our nation’s economy moves forward.

Read on to learn more about what classifies a business as minority-owned and the resources available to certified MBEs.

What is a Minority-Owned Business?

There are three types of MBEs. Depending on your size and net worth, you may be categorized as an MBE, a MOSB or an 8(a). Check the requirements below to see which categories fit your business.

Minority-Owned Business Requirements

  • Minority group members are United States citizens who are Asian, Black, Hispanic and Native American.
  • Ownership by minority individuals means the business is at least 51% owned by such individuals or, in the case of a publicly-owned business, at least 51% of the stock is owned by one or more such individuals, i.e. the management and daily operations are controlled by those minority group members.
  • Note: MBE is the term generally used by private and public entities. See below for the government term.

Minority-Owned Small Business (MOSB) Requirements

All MBE requirements plus:

8(a) Economically Disadvantaged Small Business Requirements

All MBE requirements plus:

  • Personal net worth (assets minus liabilities) is less than $750,000 excluding:
    • Ownership in business and primary personal residence
    • Income reinvested or used to pay taxes of business
    • Funds reinvested in retirement account(s)
  • Adjusted gross income averaged over three years is $350,000 or less excluding:
    • Income reinvested or used to pay taxes of business
  • Fair market value of all assets is $6 million or less excluding income reinvested or used to pay business taxes

Note: 8(a) is the government designation for an MBE.

More information about small businesses categories can be found on the Small Business Administration’s website.

Becoming Certified as a Minority-Owned Business

If you meet the requirements to be considered a MBE, MOSB, 8(a), or all of the above, your next step is the process of becoming certified. There are two types of certification, although they are not considered equal: self-certification and Third-Party Certification (TPC).

While self-certification is simpler than TPC, many of today’s corporations prefer the latter.

Third-party certification provides corporate supplier diversity programs the assurance that an independent, nationally-recognized agency vetted your company and verified your minority-owned status. 

Self-Certification

You have two options to self-certify: download and complete the affidavit form, or follow the Small Business Administration (SBA) online self-certification process. Use the links below to begin certifying your minority-owned business.

Third-Party Certification

The primary MBE certification entity is the National Minority Supplier Development Council (NMSDC). 

The NMSDC Network is headquartered in New York with 23 Regional Affiliates located across the country. 

NMSDC’s corporate membership includes 1,750 of America’s top public and privately owned companies as well as universities and hospitals.

The Regional Affiliates serve more than 13,000 minority-owned businesses. In addition to certifying MBEs, the Regional Affiliates match them with member corporations in need of their products, services, and solutions. Contact the NMSDC affiliate council closest to you to learn more about the certification process. 

Education, Funding, and Contracting Resources

Education and Training

Fortunately, both government and private institutions realize the value of supplier diversity and minority-owned businesses and are investing in supplier development. Whether you’re just beginning your business, or your company has been around a while, these educational resources are sure to help.

National Minority Supplier Development Council (NMSDC)

The NMSDC is the primary private certifier, advocate, and voice for minority-owned businesses. The organization’s mission is to advance business opportunities for its more than 13,000 certified MBEs and connect them to corporate members to form mutually beneficial partnerships.

The NMSDC Network supports and facilitates MBE integration into corporate and public-sector supply chains, builds MBE capacity and capabilities through programs and other education offerings, and facilitates MBE-to-MBE partnerships to meet the needs of its 1,750 corporate members.

Centers of Excellence (COE)

The Centers of Excellence (COE) are regional business modules designed by NMSDC to strengthen both corporate supplier diversity processes and help minority businesses compete in the global marketplace by implementing NMSDC minority business development best practices. Each business module is comprised of eight to 10 corporate members, 16 to 20 MBEs and an affiliate council president. Each module is facilitated by an NMSDC affiliate regional council and is 18 to 24 months in duration.

Learn more about COEs here

SCORE

For over 50 years, non-profit SCORE has been helping small businesses (including minority-owned) get off the ground through education and mentorship.

Because they are supported by the SBA, minority-owned businesses can take advantage of their services at no charge or at very low cost. Visit SCORE’s website to find more information on mentors, workshops, and other resources available.

US Pan Asian American Chamber of Commerce (USPAACC)

The USPAACC is the country’s largest educational, training and networking organization for Asian Americans. By connecting businesses to each other and to government entities, the USPAACC opens doors to contract, professional and educational opportunities for its members..

The USPAACC offers members business executive training programs, microgrants, business leadership webinars, and more. Learn more about the USPAACC here.

US Hispanic Chamber of Commerce (USHCC)

The USHCC actively promotes the economic growth, development, and interests of more than 4.37 million Hispanic-owned businesses that, combined, contribute over $700 billion - approximately half of total annual MBE receipts - to the American economy every year. It also advocates on behalf of 260 major American corporations and serves as the umbrella organization for more than 200 local chambers and business associations nationwide.

Learn more about the USHCC here.

8(a) Business Development Program

The 8(a) Program is a business assistance program designed specifically for small disadvantaged businesses. The program is government sponsored, highly involved, and has some inspiring success stories. Participants of the program go through a four-year developmental stage followed by a five-year transition stage. In addition to the nine-year program, participants have access to specialized business training, marketing assistance, and mentorship programs, to name a few. Find out how your 8(a) minority-owned business can participate here.

Operation HOPE Small Business Empowerment Program

Operation HOPE is designed for aspiring entrepreneurs in “low-wealth” neighborhoods, which often include minorities. Program participants complete a 12-week training program covering topics for new businesses such as creating a business plan and accessing capital, as well as more established businesses that may need help with marketing or scaling. Learn more at Operation Hope. 

Funding

Access to capital is one of the main obstacles to business equality. The federal government offers several forms of assistance so business can receive funding through loans and grants. And thanks to the reach of the Internet, crowdfunding has opened easier access to millions of small investors well.

Small Business Administration (SBA) Guaranteed Loans

One of the many resources the Small Business Administration provides is access to loans; however, the SBA does not loan money directly to small businesses. Instead, the Administration establishes loan guidelines with partnering lenders around the country. The SBA guarantees these loans will be paid, which means small businesses (like you) generally receive lower, more competitive rates and fees compared to non-guaranteed loans. Find more information about SBA-guaranteed loans.

USA.gov

Aside from the SBA, the United States offers other government-backed loans and funding resources. You can find more detail on how to get funding or grants for an 8(a) categorized business here.

Minority Business Development Agency (MBDA)

The MBDA is part of the U.S. Department of Commerce. The agency promotes the success of minority-owned and operated small businesses by connecting owners to experts on everything from securing capital to identifying a strategic partner to taking your business global. You can contact a local MBDA business center for more information.

Crowdfunding

As the name suggests, crowdfunding is used by businesses to pull small investments from a large number of investors – unlike traditional investments made by a handful of people. Many small businesses have found success exercising this type of investment strategy.

Crowdfunding sites have become an increasingly popular way to raise money for business ideas ranging from video games to backpacks to feature films to beehives. The SBA provides more detail on how to successfully crowdfund for your minority-owned. 

Contracting Opportunities

Both the federal government and many of America’s top corporations require their procurement departments to spend a certain percentage with diverse suppliers every year. Once you are certified as an MBE, it’s time to leverage that certification to gain access to contracting opportunities.

Supplier Registration Platforms

To streamline supplier diversity, blue chip firms invest in third-party supplier registration portals to streamline the buyer-supplier contracting process.

Free registration, seamless communication with potential buyers, and robust opportunity filtering are just a few features that a quality platform should provide to suppliers. Register your company today to start on the path toward working with Fortune 1000 companies.

8(a) Business Development Program

Small disadvantaged business participants may be eligible for sole-source contracts, up to $4 million for goods and services and $6.5 million for manufacturing, through the 8(a) Program.

What may be an even greater aspect of the 8(a) Program is a participant’s ability to form a joint venture or team to bid on contracts. This gives 8(a) firms the ability to fulfill larger contracts that they may not be able to handle alone, while also developing industry relationships. Interested in learning more about the 8(a) Program and its requirements? Find that information here.

Historically Underutilized Business Zone (HUBZone) Program

The Small Business Administration created this program to assist businesses in economically depressed areas who often face greater business disadvantages.

While not restricted to minority-owned businesses, the HUBZone program can be a boon to your organization if you qualify. This two-minute video gives a quick overview, as well as details on how to participate in the program.

Which resources have you leaned on as you strive for success as a minority-owned business?

 

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For over a decade CVM's mission has remained unchanged: lead the transformation of Supplier Diversity program management and support Supplier Diversity programs. CVM helps corporate supplier diversity programs in every stage of their evolution; from those that are just getting started, to the most advanced, world-class programs. Equipped with unparalleled data intelligence, superior technology and expertise guidance, businesses can effectively establish and advance their Supplier Diversity initiatives.