Running a small business is a challenge no matter who you are, but minority business owners may face specific hurdles. Fortunately, minority business owners can take advantage of certifications that provide access to contracts, mentors, funding and more. Here’s a look at how to become certified as a minority-owned business and access the benefits that can give your business a leg up.
What does it mean to be certified as minority-owned?
The most prominent registering body for minority-owned business is the National Minority Supplier Development Council (NMSDC). The organization’s mission is to advance business opportunities for minority-owned businesses, including those owned by Asian, Black, Hispanic and Native American people. To become a member, a business must be at least 51% owned by minority individuals, and the minority owner members must exercise management of the operation. The business must be a for-profit enterprise located in the United States or its territories.
Qualifying businesses may also want to consider the U.S. Small Business Administration’s (SBA) 8(a) Business Development program, which helps provide a level playing field for socially and economically disadvantaged people. These groups tend to be minorities, but can also include people with disabilities, or others who’ve experienced chronic discrimination. Qualifying businesses must be 51% owned by economically and socially disadvantaged citizens. Owners must have a personal net worth of less than $750,000, among other economic limitations.
Certifying both as a minority-owned business and under the 8(a) Business Development program provides the most access to support and benefits from government agencies and private business. Here’s a look at some of those benefits:
Access to contracts and contacts
The government sets aside a certain number of contracts each year that must be filled by a business with certain demographic qualifications, such as the SBA’s 8(a) certification. In fact, at least 5 percent of all federal contracting dollars each year generally go to businesses registered as 8(a). Specific agencies may set aside even more. For example, in Maine, the state Department of Transportation is committed to contracting with 8(a) companies “to the maximum feasible extent.”
In addition to providing access to contracts, the certifying organizations are committed to community building. For example, the NMSDC hosts regular business fairs to help get your business in front of potential customers.
Mentoring and training
Both programs offer assistance and skill development. The SBA offers technical assistance, marketing assistance, business training, counseling and executive development.
To help businesses get established and meet their goals, the SBA offers a mentor-protégé program for 8(a) businesses. This program can help small business protégés acquire funding through equity investments and loans. It can also help protégés acquire technical and management experience, and trade education.
The NMSDC offers education programs and scholarships to help entrepreneurs grow and learn, as well as executive training programs.
Access to funding sources
Small businesses often need access to funding to grow or get off the ground. The NMSDC’s Growth Initiative links members with institutional investors that offer funding while allowing the business to retain its minority status by maintaining management and control.
Certification with NMSDC or as an 8(a) may also help you qualify for lending through community development financial institutions, which lend with a mission to expand opportunities to underserved areas and populations.
Networking and support
The NMSDC works to connect over 1,400 members with each other, buyers, suppliers and successful corporations. They’ve used this network to build community and support through tough times. For example, the organization created the “In This Together” campaign as a response to racial injustice and the devastating blows dealt by the COVID-19 pandemic. The program advocates for supplier diversity and offers a rebuilding fund. It has also implemented the Minority Business Advocacy Initiative, which is focused on building minority businesses by eliminating the racial wealth gap and the start-up capital gap.
For minority business owners, certification with these programs offers concrete incentives and a deep sense of community. Mentors and peers who have been in your shoes can help you at every step of the way as you build a successful business.
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