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MBE, WBE, SBE, CSB, DBE & 8(a) Certification: Frequently Asked Questions

Minority-Business Certification originated at the federal level in 1968 and more recently, at the level of local governments and in the private sector. These programs aim to integrate a diverse supplier base in global business practices. There are laws, such as the Federal Acquisition Regulation, which require the federal government sector to target participation of minority firms that are assessed. Each are measured and re-adjusted regularly for best performance of the participation of the minority business. This process exists at other levels of state and local government.

Many corporate companies automatically subscribe to supplier development programs (based on a good faith effort) that have the same outcome: to increase the supplier base, increase competition, lower the cost of purchases and supplies and promote the participation of minority businesses and/or women-owned. A minority business enterprise (MBE) means that at least 51% of the company is owned by one or more socially and economically disadvantaged persons or women and that their administration and daily business activities are handled by the same socially and economically disadvantaged owners. The term “socially and economically disadvantaged” refers to U.S. citizens and in most cases residents which are: African-Americans, Hispanic-Americans, Native-Americans, Asian-Americans or Veterans.

Below are frequently asked questions related to certification issues.

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Below are frequently asked questions related
to cretification issues

  • Is Certification right for my company?

    Even though certification can be appealing to all businesses, not all minority-owned businesses qualify or would be a good fit for certification. The MBE certification requirements are designed to protect the community and the recruitment of women and minority- owned businesses and to create policies and procedures to provide access to procurement opportunities with government agencies and larger corporations. Before going through the process, it is important to understand if certification is a good fit for your company.

    The following is a self-assessment to determine if your business would qualify for certification:
    1. Do you provide a product or service that is geared towards government agencies and/or corporations?
    2. Does your business meet the financial capacity to be able to meet the needs of these agencies?
    3. Is your business owned 51% or more by a person of an economically disadvantaged group?
    4. Are you independently owned and controlled?
    5. Do you understand that the certification is a marketing tool and does not guarantee work opportunities?
    6. Are you a legal entity (such as a corporation or a limited liability company)?

    If you have answered yes to all of these questions, than certification is a good fit for your company.

  • What Agencies Provide MBE or WBE Certification?

    Minority or women business enterprise (MBE/WBE) certifications are typically provided by each of the federal, state and local government contracting authorities in addition to private corporations through other certification agencies. Many of the certification requirements are similar. Many of the agencies recognize certifications already issued by other agencies. The certifications can substantially increase the business visibility of a small business. For instance, the business is listed in an MBE/WBE directory provided to companies doing business with the government.

    The companies rely on this directory in finding qualified MBE/WBE companies to meet the government’s utilization goals, often listed on a contract specific basis.

    The following government agencies provide MBE/FBE certification program within the Northeast Ohio:

    The following private organizations provide certification accepted at corporations:
    The Northern Ohio Minority Supplier Diversity Council:
    http://msdc.adaptone.com/nomsdc/


    The City of Cleveland (MBE/FBE/CSB):
    http://www.city.cleveland.oh.us/CityofCleveland/Home/Government/CityAgencies/OfficeofEqualOpportunity
    Cuyahoga Metropolitian Housing Agency (MBE/FBE/Section 3):
    http://www.cmha.net/hopevi/sdbprogram.aspx
    State of Ohio:
    http://www.development.ohio.gov/Minority/minoritysmallbusinesscert.htm
  • What is required for MBE/WBE Certification?

    While variants exist from agency to agency, the MBE/WBE certifications require:
    a. That the company be owned and controlled by a minority or a woman.
    b. That the controlling minority or woman be capable of performing the daily business management of the company.

    Ownership is established through proof that the minority or woman owns at least 51% of the stock of the corporation or hold a 51% interest in any partnership. The “control” factor requires proof that the minority or woman holds 51% control of the voting power of the business.

    The owner must also prove that he or she controls the daily management of the company. This inquiry is established to eliminate “front” companies or those companies where a minority or woman owns 51% of the company but does not manage the business. For certification purposes, the minority or woman must be capable of running most, if not all, aspects of the business. This requires more than just performing accounting functions. The certifying agency will examine whether the minority or woman has taken out personally guaranteed loans for business purposes, the professional certifications or licenses held, the technical training received and the owner’s ability to trouble-shoot all aspects of the day to day business. If the owner does not have these full management capabilities, the owner must be prepared to show that the owners in other like or similar businesses typically do not hold all of these capabilities.

    In addition, if either a minority or woman owned business has strong non-minority management personnel involved in the business, the company should expect a much higher level of scrutiny from the certifying agency. For example, in the construction field, this heightened scrutiny sometimes requires the minority or woman to hold technical trade licenses and/or to be capable of running all equipment, small and heavy, used by the business.

    If the MBE/WBE owner is not present on a daily basis or merely performs nominal management of the company, the business will not be certified. If already certified, the business will lose its certification.

  • What is SBE Certification?

    Certain agencies, such as the Northeast Ohio Regional Sewer District and Cuyahoga County, only include a Small Business Enterprise (SBE) certification. SBE certification does not certify based on race or gender but rather the size of business. SBE certification requires proof of ownership, control and management in addition to size of business depending on particular trade based on an average of annual gross revenue. Size of business requirements are provided by each certifying agency.


    For more information on the following programs, contact:
    The Northeast Ohio Regional Sewer District:
    http://www.neorsd.org/sbe.php
    Cuyahoga County:
    Cuyahoga County: http://opd.cuyahogacounty.us/en-US/services.aspx
  • What is the DBE Certification?

    Certain agencies, including the Regional Transit Authority (RTA) and the Ohio Department of Transportation (ODOT) and most federal agencies also include a Disadvantaged Business Entity (DBE) certification. In addition to requiring proof of the Minority/Women ownership and control of the company, the DBE certification, also requires proof of the owner’s social and economic disadvantage. “Social disadvantage” is presumed for any recognized minority including African-Americans, Indians, Aleutians, Asians, and Hispanics, although this presumption is subject to third party challenge.

    Non-minorities can also prove “social disadvantage” through documentation of special circumstances in their lives creating the disadvantage. “Economic disadvantage” is established through the owner submitting an affidavit and backup documentation showing their personal net worth to be less than $750,000.00.

    Even if DBE status is granted, the certification is cancelled when the owner’s personal net worth exceeds the $750,000 threshold.

    The Greater Cleveland Regional Transit Authority:
    http://www.riderta.com/bc_businessdev-dbe.asp
    The Ohio Department of Transportation:
    http://www.dot.state.oh.us/Divisions/EqualOpportunity/Pages/DBE.aspx
  • What is 8(a) Certification?

    The 8(a) certification is offered by the U.S. Small Business Administration. Similar to the local and state DBE certification, the 8(a) certification requires proof that:

    a. The company is 51% owned or controlled by a minority or woman, and
    b. That the minority or woman owner was socially and economically disadvantaged

    Involving a more stringent evaluation process, the 8(a) certification is still one of the most valuable certifications available due to its utilization in many large dollar federal government contracts. If the small business owner provides a product or service in large demand by the federal government, the 8(a) certification is a worthwhile goal to explore.

    For more information, visit :
    http://www.sba.gov/aboutsba/sbaprograms/8abd/index.html
    The Ohio Department of Transportation:
    http://www.dot.state.oh.us/Divisions/EqualOpportunity/Pages/DBE.aspx