Most business owners know the SBA can provide many different benefits for small business owners. What you may not know is that the SBA also provides certifications for particular types of business owners, including minorities, veterans and women. Obtaining these certifications could give a business a competitive edge in seeking new business opportunities and establishing credibility in the market. Government agencies, contractors and many other businesses have both governmental regulations and internal policies that mandate a certain percentage of contracts be awarded to minority-owned, veteran-owned and women-owned businesses. An SBA certified business is in a good position to receive contracts from businesses or government entities.
What are the basic requirements for certification?
Women business owners may get certified as a Women Business Enterprise (WBE), a Women-Owned Small Business (WOSB), and an Economically Disadvantaged Women-Owned Small Business (EDWOSB). Each designation has its own requirements and provides its own benefits. The core requirements of all designations are that a woman must:
- Own and control at least 51% of the business,
- Be active in daily management, and
- Serve as the highest ranking member of the company.
Qualifications for the WOSB and EDWOSB also require that the company be a small business. What qualifies as a small business is determined by the SBA based on where the business falls under the North American Industry Classification System (NAICS). Additionally, the EDWOSB certification requires that the woman owner is economically disadvantaged. A woman is presumed economically disadvantaged if:
- Her personal net worth is less than $750,000,
- Her adjusted gross yearly income averaged over the three years preceding the certification does not exceed $350,000, and
- The fair market value of her assets (including her home and business) does not exceed $6 million.
Additionally, there is a certification available for any Service Disabled Veteran-Owned Small Business Concern (SDVOSBC). Eligibility requires the service disabled veteran to:
- Have a service-connected disability,
- Be the owner and operator of a small business, and
- Hold the highest officer position in the company.
The SBA also runs the 8(a) Business Development Program which helps small disadvantaged businesses. The 8(a) program is a nine year program split into two phases. The first phase helps businesses through a four year developmental stage and the second phase is a five year transition stage. Participants in the 8(a) program receive specialized business training, counseling, executive development, the ability to receive sole-source contracts, and the opportunity to participate in an exclusive mentor-protégé program.
How does a business owner obtain certification?
A business may be certified as a WBE, WOSB or EDWOSB in two ways. A business owner can either self-certify through the System for Award Management (SAM), a government-maintained database, or use a third party certifier. If using a third party certifier, a business owner can choose between four SBA-approved third party certifiers for WBE and WOSB and three third party certifiers for the EDWOSB designation. The certification process includes an application and detailed documentation proving ownership and control. Required documentation may include financial statements, tax returns, bank account and loan information, operational documents, resumes for all owners and key employees, licenses and permits, lease agreements, and other requested information.
Essentially, the application and documentation are the same whether a business owner self-certifies or uses a third party certifier. The main difference in the two methods is what documentation can be seen by others. If an owner self-certifies, the owner must upload all of the required documents to an online repository. Anyone considering awarding business to the potential WBE, WOSB or EDWOSB has the ability to review the documentation to ensure that the self-certification is accurate. Conversely, if an owner uses a third party certifier, the owner provides all necessary documents to the certification agency. The owner will receive a certification document upon approval. Anyone considering awarding business to the potential WBE, WOSB or EDWOSB, will only access the approved certification document from the repository.
The SBA maintains control over ensuring the accuracy of certifications and continued compliance with the requirements. The SBA may investigate the accuracy of any certification or representation of self-certification. Additionally, any interested party (another business bidding for the same contract) or a contracting party may submit a protest against any business that they believe does not meet the certification requirements. The SBA is in charge of reviewing each protest and issuing a final determination.
How long does the certification last?
Some states provide their own state certifications which vary in length depending on the state. The federal certification for a WBE, WOSB, and EDWOSB lasts for one year. The re-certification process after the initial application is approved is much simpler if a third party certifier was used.
Certification as a WBE, WOSB or EDWOSB can provide access to local, state and federal government agencies looking for certified companies to meet their contracting needs. For more information visit www.SBA.gov or contact Sheila Seck, at 913-815-8485 or by email at email@example.com, for help in navigating and completing the application process.