November 11, 2016

Are You Certifiable?

Written By

Mary C. Garris
Member, Stoll Keenon Ogden PLLC

Who are majority owners of 38 percent of U.S. businesses, employing nearly nine million people and generating more than $1.6 trillion in revenue?

According to The 6th Annual State of Women-Owned Businesses Report commissioned by American Express OPEN, women are.

The report also notes that businesses owned by women of color are among the fastest growing sectors of women-owned firms. 

Despite this post-recession growth, minority/women owned businesses still face hurdles. But certification as a WBE (Woman Business Enterprise), MBE (Minority Business Enterprise) or DBE (Disadvantaged Business Enterprise) may be an invaluable tool to help improve competitiveness and provide resources, giving access to grants or loans, marketing databases and educational opportunities, and distinguishing certified businesses from other players in the marketplace. For example, businesses certified by Kentucky’s Minority and Women Business Enterprise Certification Program are listed on a state website, providing enhanced exposure to desired vendors and potentially lucrative contracts.

How to Qualify

Generally, a WBE or MBE must be at least 51% woman-owned/minority-owned. For purposes of MBE certification, a business must be managed and controlled by a person belonging to one of these groups: 

A DBE must be at least 51% owned by at least one socially and economically disadvantaged individual who is African American, Hispanic American, Native American, Asian-Pacific American, Subcontinent American or a woman. There also are personal net worth requirements.

In addition to majority ownership, management and control being reflected in the company’s ownership documents, the qualifying owner (or owners) must maintain control and authority of the company. They must be the primary power directing management of the company, as evidenced by governance documents and day-to-day operations, signing contracts and checks.    

The Process  

The certification process may vary depending on the certifying organization or agency, but generally involves two steps.

First, an application must be completed and submitted with organizational, financial and operational information. The application is evaluated by the certifying organization, which schedules the Second step: an onsite interview at the applicant’s company. 

The onsite interview is typically very thorough and designed to confirm that the applicant satisfies all criteria, particularly ownership, independence and control. 

Following the onsite interview, the certification committee reviews the application and determines if the application should be approved or denied. 

An application may be deferred or delayed if key information and documentation are insufficient or missing.

If an application is denied, the decision may be appealed, but the appeals process takes time and may not be successful. In many cases, if the business is denied certification, it is necessary to disclose such denial in any future application for certification.

While the process takes some investment, certification as a WBE, MBE or DBE may provide your business with additional opportunities and resources to further growth.

SKO can help you navigate the certification process from beginning to end. Contact the authors to learn more.

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