Small Businesses & HUBZone Certification: Is it Worth It?
Small businesses can qualify for set-aside government contracting work by obtaining Historically Underutilized Business Zones (HUBZone) certification through the US Small Business Administration (SBA).
The question is whether obtaining this certification is worthwhile for your business.
What Is the SBA HUBZone Certification Program?
This program targets distressed communities where unemployment is especially high. The objectives are to promote economic development, capital investment and job growth in these areas by providing assistance to qualifying firms.
Once a qualifying small business obtains program certification, the contractor gains preferential access to federal contracting opportunities set aside for HUBZone firms. By certifying qualified firms and providing enhanced access to government contracting opportunities, the SBA hopes to decrease unemployment and improve the economic standing of distressed communities. According to SBA.gov, “the federal government tries to award at least three percent of all federal contracting dollars to HUBZone-certified small businesses each year.”
How Do Minority-Owned Businesses Qualify for HUBZone Certification?
The requirements for HUBZone certification include:
The firm must meet the SBA definition of a small business.
The firm must be at least 51% US owned and controlled by US citizens, a Community Development Corporation, an agricultural cooperative, a Native Hawaiian Organization, or an Indian tribe.
The firm’s principal office must be in a HUBZone.
At least 35 percent of the firm’s employees must live in a HUBZone.
U.S. owned and controlled means that at least 51 percent of the firm’s ownership and management must be legal citizens of the United States and this threshold must be maintained to continue to compete for new contracting opportunities. However, employees need not live in the same HUBZone as the company’s principal office.
To apply, you must complete and submit a preliminary application online. Once the SBA receives and reviews your preliminary application, it will contact you to obtain the detailed information required to obtain certification.Although the SBA strives for a 90-day limit on the approval process, it can often take longer.
Is Getting a HUBZone Certification Worth it for Your Small Business?
Applying for and obtaining HUBZone certification takes time and effort that for some companies may be better spent pursuing other avenues of business development. For other small or minority-owned contractors, the potential for getting set-aside work is worthwhile.
One factor to consider is your location. Some states and geographic regions have substantially more HUBZone-certified firms than others. The more certified firms your area has, the greater the competition for set-aside work. This could make the laborious application and approval process less beneficial than it might otherwise be.
For help in determining whether this or other government-sponsored business development opportunities are worthwhile for your business, talk to Meridian West Consultants.
We provide our clients with a comprehensive suite of business development services designed to help you achieve your goals for business growth and success. Our services are customized, scalable and tailored to your needs and budget. Opportunity tracking, bid/no-bid analysis and proposal management are just a few of the value-added services that we offer.
Contact our office today to learn more about how HUBZone and other business development programs can help your small business grow and thrive.