Minority Business Enterprise: What is it?
A company owned by a citizen of the United States who belongs to an acknowledged minority group is known as a Minority business enterprise (MBE). For example, African Americans may own a minority-owned business; Asian Americans, Hispanic Americans, or Native Americans follow the frameworks of U.S. commercial law. Obtaining certification as a minority business enterprise may provide your business access to grants and tax-saving options, which may improve your bottom line in addition to new marketing and sales chances.
MBE certification: What is it?
Gaining formal government acknowledgement that a company is owned by a member of a racial minority group requires MBE certification. The United States Small Business Administration oversees the MBE programme. To assist in overcoming some of the structural difficulties minority-owned firms in the U.S. encounter, MBE and associated programmes were developed. Other initiatives focus on different demographics, such as women- and service-disabled, veteran-owned small companies.
How to become a certified MBE?
A sizable nonprofit organization called the National Minority Supplier Development Council (NMSDC) is in charge of accrediting new MBEs. Find your local NMSDC affiliate if you believe you qualify.
You should go over the requirements again to ensure you are eligible before beginning the difficult process of gathering forms and getting in touch with a certification authority. The following are the certification requirements:
- the applicants should be a Citizen of the United States.
- Minority ownership, management, and control must comprise at least 51% of minority-owned firms. A person is considered a member of a minority group under the NMSDC programme if they are at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic, or Native American. A mix of document checks, screenings, interviews, and site visits are used to determine minority eligibility. When referring to a publicly traded company, ownership is defined as at least 51 per cent of the shares being held by members of a minority group.
- Must be a for-profit company with a physical presence in the United States or one of its trust territories.
- The minority owner must be involved in the management and everyday operations (s)
- Assemble the necessary paperwork:
Depending on your company, you may need to submit more than a dozen documents to be certified, while the number of forms depends on the kind of business registration you choose. These comprise financial documents, details about the business organization, a completed application, and any regular IRS paperwork you might already have. In addition, a birth certificate or other official document is required to prove your status as a minority.
- Fill out the application online:
Your company is now formally under consideration for MBE certification due to the application. Therefore, spend the time necessary to complete it thoroughly and precisely, just like a job or college application. It would be unfortunate to be rejected due to a form’s mistake.
- Paying the application fee
Depending on the yearly income of your company, fees change. The cost range varies by location and is higher for larger businesses. For example, fees in Southern California are between $300 to $1,200. Fees range from $400 to $1,500 in the New York and New Jersey regions. For information on your applicable application and recertification costs, contact your local MSDC.
- Upload the necessary records:
Through the online certification page, scan and upload any necessary papers. If you don’t have a scanner, use a photo-to-document scanner app for your smartphone.
- Analyzing applications:
After everything is submitted, a representative from your local MSDC will check the application for accuracy and make contact with references.
- Site visit:
NMSDC Certification Specialist will visit your company as part of the certification procedure. The expert attests that the business is real and runs as indicated in the application. Note that during the COVID-19 epidemic, these may be virtual.
- Review by the Certification Compliance Committee:
A committee evaluates the application and site visit materials after the first application assessment and site inspection. Then, they will advise the Board of Directors to certify the applicant based on the submission.
- Board of Directors Approval:
The board’s approval is the last stage. Your company will be accredited as an MBE after their final approval.
What Advantages Come with an MBE Certification?
The advantages of being a legally recognized minority company owner are likely significant. Several instances might be:
- A feeling of community
- Obtaining contracts that previously appeared improbable
- Possessing marketing possibilities
- Accessing government procurement
- Having additional government resources available to you
- Greater opportunity
- Presenting your company to major businesses
- Differentiating your company from competing ones
Although there are financial advantages to working with an MBE, there are no explicit tax reductions for being an MBE. If you’re accredited, that can encourage customers to use your firm more often. However, certified MBEs are in a better position than most to benefit from tax and grant programmes targeting low-income communities with diverse populations, even if you do not obtain any MBE-specific tax deductions or credits. Additionally, there are private and public funding programmes for firms owned by minorities. Even though MBE certification isn’t always required, having it won’t hurt when trying to demonstrate that your company is eligible for the programme.