How to become a certified minority-owned business

In today’s business world, having a diverse workforce and embracing inclusivity are key to success. One way businesses can achieve this is by becoming a certified minority-owned business. The certification provides numerous benefits, including access to funding opportunities, government contracts, and networking opportunities. It also helps to foster a sense of credibility and trust with potential clients and partners.

However, becoming a certified minority-owned business can be daunting, especially for first-time entrepreneurs. Let’s walk through the entire process and provide you with all the information you need to know. After we cover the definition of a minority-owned business, the certification process, and the benefits of certification, we’ll go over the various funding opportunities available to minority business owners and highlight some of the pathways to certification.

What is a minority-owned business?

Minority-owned businesses are owned, operated, and controlled by individuals from one or more minority groups. These groups usually consist of African Americans, Hispanic Americans, Native Americans, Asian Americans, and Pacific Islanders. These businesses can be small or large and span different industries, including technology, healthcare, retail, and entertainment.

The importance of minority-owned businesses cannot be overstated. For one, they play a significant role in driving economic growth and development. According to a study by the Minority Business Development Agency (MBDA), minority-owned businesses contribute $1 trillion in economic output annually. By creating jobs, generating revenue, and investing in their communities, these businesses help to stimulate economic growth and improve the standard of living for all.

Moreover, minority-owned businesses are essential in promoting diversity within various industries. They bring fresh perspectives, innovative ideas, and unique experiences that can help businesses better serve a nation’s diverse communities. By supporting these businesses, we can create a more inclusive society where everyone can access opportunities and resources to succeed. Being a minority-owned business is not just a label; it is an opportunity to contribute to the growth and development of our society. 

What are the benefits of a minority-owned business?

Becoming certified as a minority-owned business can unlock a range of benefits, including access to government contracts, preferential treatment in procurement processes, networking opportunities with other minority-owned businesses, and eligibility for various grants and incentives. Let’s break these benefits down a bit:

Access to government contracts:

Being certified as a minority-owned business can give you access to government contracts, which can be a significant source of revenue for your business. Many local, state, and federal government agencies have programs designed to help minority-owned businesses, and being certified will make you eligible to participate in these programs.

Preferential treatment in procurement processes:

Many private companies have supplier diversity initiatives that require a certain percentage of their contracts to be awarded to minority-owned businesses. Being certified can give you a competitive advantage in these procurement processes and improve your chances of winning contracts.

Networking opportunities with other minority-owned businesses:

Certification as a minority-owned business can also give you access to a network of other minority-owned businesses. These networks can provide valuable resources, community-building, training, and support to help you grow your business.

Eligibility for grants and incentives:

Many grants and incentives are available to minority-owned businesses at the local, state, and federal levels. Being certified can make you eligible for these programs and help you secure funding to grow your business.

Enhanced reputation and brand recognition:

This certification can also enhance your reputation and brand recognition. Many customers and suppliers value diversity and seek out minority-owned businesses to work with. You can leverage your business as a leader in diversity and inclusivity. This can be an excellent marketing opportunity to attract new customers and partners who value and prioritise inclusivity in their business relationships.

3 Easy ways for minority-owned businesses to obtain certification

While certification can often open the doors to a world of opportunities, the certification process can be time-consuming and complex. Fortunately, some platforms offer streamlined and expedited certification options. Here are the top three easiest and fastest ways for minority-owned businesses to get certified:

NMSDC Certification

The National Minority Supplier Development Council (NMSDC) certifies minority-owned businesses through a rigorous process that verifies ownership, control, and operational status. NMSDC certification opens doors to corporate supplier diversity programs and contract procurement opportunities.

The certification process is easy and straightforward, and the NMSDC provides a wealth of resources to help businesses through the process. 

Typical time to certification: 30 to 45 days

Women-owned small business certification/women’s business enterprise

For women entrepreneurs, obtaining certification as a Women-owned small business (WOSB) or Women’s business enterprise (WBE) can provide access to federal contracting opportunities set aside specifically for women-owned businesses. You can obtain certification through the Women’s business enterprise national council (WBENC) or the Small business administration (SBA).

The WBENC certification is focused on certifying women-owned businesses. The certification process is simple, and the WBENC provides a range of resources to help businesses through the process. 

Typical time to certification: 60 to 90 days

SBA 8(a) Business Development Program

The SBA 8(a) business development program is designed to assist socially and economically disadvantaged businesses, including those owned by minorities. Qualifying for the 8(a) program opens doors to government contracting opportunities, mentorship, and business development resources.

The certification process is relatively easy, and the SBA assists businesses throughout the process.

Typical time to certification: up to 90 days

How to qualify for minority-owned business certification

Certain requirements must be met to qualify for minority-owned business certification. The most crucial requirement is that the business must be owned and controlled by one or more individuals who are part of a minority group. Minority groups are typically defined as those who are socially and economically disadvantaged due to their race, ethnicity, gender, or sexual orientation.

In addition to minority ownership and control, the business must demonstrate active participation in its daily operations. This means that the owners must be involved in the decision-making process and have a significant role in running the business.

Applicants must provide documentation to prove that they meet these qualifications. This may include tax returns, organizational documents, and personal affidavits. The documentation should demonstrate that the business is at least 51% owned and controlled by one or more individuals who are part of a minority group. 

Furthermore, the owners must prove that they are involved in the business’s daily operations by providing evidence such as job descriptions, time logs, and payroll records. 

It is important to note that the certification process may vary depending on the state or organization issuing the certification. However, most certification programs follow similar guidelines and requirements. 

How to get access to minority-owned business funding

Once certified, minority-owned businesses also gain access to a variety of funding opportunities. Here are a few of the most popular types:

• Government grants: Minority-owned businesses may be eligible for grants from government agencies. These grants do not have to be repaid and can be used for various business purposes.
• Loans: Several loan programs are available specifically for minority-owned businesses, including those offered by the SBA. These loans usually have lower interest rates and more flexible repayment terms than traditional loans.
• Venture capital: Minority-owned businesses can also seek funding from venture capital firms. These firms invest in companies with high growth potential in exchange for an ownership stake.
• Angel investors: Angel investors invest in startups and small businesses. They provide funding, expertise, and industry connections.
• Crowdfunding: Crowdfunding is a way to raise money from a large number of people, typically through online platforms. This can be an effective way for minority-owned businesses to get funding and build a community of supporters.
• Accelerator programs: Accelerator programs provide funding, mentorship, and other resources to startups and early-stage businesses. Many accelerator programs focus on underrepresented groups, including minority-owned businesses.

These are just a few of the ways that minority-owned businesses can get access to funding. Platforms like Swoop can be a helpful resource for finding funding opportunities tailored to the needs of minority entrepreneurs.

How can swoop help

Swoop is a leading platform that connects minority-owned businesses with funding opportunities and resources to support their growth and success. Through Swoop, entrepreneurs can easily explore available loans, grants, and other financial assistance programs. This demystifies the funding process and empowers minority-owned businesses to thrive.

At Swoop, we understand that every business is unique, and that’s why we offer personalized support to help you find the funding options that best meet your needs. Whether you want to expand your business, purchase new equipment, or hire more staff, our small business lending professionals are here to help. If you’re a minority-owned business looking to grow and succeed, contact Swoop today to learn more about how we can help you achieve your goals.