Minority and women-owned businesse enterprises (MWBEs) in the United States may qualify for a number of federal and state programs that ensure equal acess to contracting, subcontracting and other construction industry jobs. These programs fall under the umbrella of the Disadvantaged Business Enterprise (DBE) Program established in 2009 by the Safe, Accountable, Flexible, Efficient Transportation Equity Act. Under the DBE program, various federal, state and local agencies are required to set minimum participation goals for MWBEs.
For example, agencies funded by the Department of Transportation, including the Federal Aviation Administration, the Federal Highway Administration and the Federal Transit Administration, must set minimum annual participation goals for MWBEs. They must also establish minimum contract-specific subcontracting goals. Additionally, the Small Business Administration requires that all contractors submitting bids for construction projects in excess of $1 million include a plan for including MWBEs.
What is an MWBE?
An MWBE is a small business that is at least 51 percent owned, operated and controlled by a woman or women or members of an ethnic minority. The enterprise must be a for-profit business and physically located in the United States. If the business is publically owned, women or ethnic minority members must control 51 percent of the stock.
To qualify for MWBE certification, the owner(s) must be either American citizens or resident aliens. Further, the owner(s) must be female or provide documentation that they are at least 25 percent Black, Hispanic, Native American or Asian. The National Minority Supplier Development Council provides further guidance on countries of origin for the defined ethnic groups.
Additionally, under the guidelines of the federal DBE program, the prospective business must meet size requirements as measured by annual gross revenue and the business category as determined by the North American Industry Classification System code. Depending on the type of business, the upper limit can range from $2.5 million per year to $17.4 million averaged over the preceding three years. Retailers, wholesalers and manufacturers must employ between 500 and 1,500 workers and demonstrate annual average gross sales of under $17.4 million.
Lastly, recently adopted regulations require that all applicants for MWBE certification complete a personal financial statement. Each eligible owner must have a net worth of under $750,000, excluding the value of the owned business interest and the applicant’s primary residence.
Becoming Certified as an MWBE
MWBE certification occurs at the regional or local level. (To find and agency in your area, click here.)
To become certified as an MBE, applicants must supply the necessary documentation and a non-refundable application fee to the National Minority Supplier Development Council. The NMSDC also collects an annual recertification fee.
Similarly, certification as a woman-owned business requires submission of appropriate documentation and payment of a fee to the National Women’s Business Council. Documentation must demonstrate the following:
- The contribution of the female business owner is real and in proportion to the percentage of the business owned
- The woman or women business owner(s) direct the management, policy, fiscal and operational functions of the company
- The woman business owner is qualified to run the business without relying on the financial or other resources of a company not owned by a woman.
The preceding are only general guidelines, and don’t represent a comprehensive list of programs offered at the federal, state and local level throughout the United States. We’ll cover more about these programs in future posts.
Here at the Carmoon Group Ltd., we support minority and women owned businesses and do all we can to help MWBE candidates get the assistance and support they need. We offer comprehensive risk management solutions, including insurance products and surety bonds to small businesses across the United States. Please give us a call to set up an appointment to discuss your needs, or reach out online and we’ll get back to you right away.