Table of Contents
If you own or want to start a business and you also happen to be female or a member of a minority group, you may want to seek special certification for your company.
Being officially recognized as a woman- or minority-owned business typically comes with a number of advantages, including eligibility for corporate and government contracts, more funding opportunities, and access to business counseling and other assistance.
Read on to learn what it means to be certified, plus the steps you need to take to get your company registered, whether you’re just starting out or have been in business for many years.
Key Points
• To qualify as a minority- or woman-owned business, the majority of the business needs to be owned and operated by one or more minority members or women.
• Several organizations offer minority- or woman-owned business certification, including the National Minority Supplier Development Council (NMSDC) and the Small Business Administration (SBA).
• There are multiple types of certification for minority- and woman-owned businesses, such as Women-Owned Small Business (WOSB) and Women’s Business Enterprise (WBE).
• The certification process can take between one and three months.
• There are specific grants and loans for minority- and woman-owned businesses.
How to Know if You Might Qualify as a Minority- or Woman-Owned Business
A good first step to starting a minority- or woman-owned business is to make sure your business qualifies as one.
If you’re planning on certifying as a woman-owned business, you’ll likely need to meet the following qualifications:
• At least 51% of the organization must be owned, operated, and run by one or more women.
• The woman or women who own and operate the business must be U.S. citizens.
• A woman must be in charge of the daily processes and operations in the company.
• One or more of the women owners must control the management of the organization.
To be eligible for the Women-Owned Small Business (WOSB) Federal Contract program, you’ll also need to be considered a small business according to the Small Business Administration (SBA), which offers this online size standards tool.
If you’re applying for a minority certification, your business will likely need to meet these criteria:
• At least 51% of the organization must be owned, operated, and run by one or more minority members.
• The minority owner or owners must be U.S. citizens.
• One or more owners must be at least 25% Hispanic American, African American, Asian American, Native American, Pacific Islander, or Native Alaskan.
• The minority owner must have paperwork to prove their background.
Recommended: Comparing Personal Loans vs Business Loans
Steps to Starting a Minority- or Woman-Owned Business
If you’re starting a new minority- or woman-owned business, there are a number of steps you’ll likely need to take before applying for certification. These include:
• Nailing down your business idea
• Writing a business plan
• Registering your business name
• Choosing a legal structure for your business
• Registering for federal, state, and local taxes
• Getting any necessary business licenses or permits
If your goal is to get certified as a minority- or woman-owned business, it can be smart to keep the qualifications listed above in mind as you plan, structure, and get your business off the ground. If you’re looking for capital for your new venture, you may also want to explore small business loans for startups.
While certification programs typically require companies to have one to two years of business activity before they can apply for minority- or woman-owned status, some will consider newly formed entities.
When you’re ready to apply for certification, these steps can help you navigate the process.
1. Choosing Your Preferred Organization
You can apply for minority- or woman-owned status through several different organizations. These include:
• The National Minority Supplier Development Council (NMSDC), which offers certification as a minority business enterprise (MBE)
• The Small Business Administration (SBA), which offers WOSB certification
• The National Women Business Owners Corporation(NWBOC), which offers Women’s Business Enterprise (WBE) certification
• The Women’s Business Enterprise National Council (WBENC), which also offers WBE certification
WBE certification opens up opportunities in the private sector, whereas WOSB certification allows you to bid on government contracts.
If your business is primarily involved in government work, another option is to pursue certification through a state or local agency. You can check your city’s official website to see if it has certification programs.
2. Gathering the Necessary Documents
Once you’ve chosen an organization or agency, you can review the documents you’re required to submit for the type of certification you’re applying for.
To apply for MBE certification with the NMSDC, the necessary documents include:
• Proof of U.S. citizenship
• Proof of ethnicity for owner(s)
• Two years of federal business tax returns
• Current business financial statements
• Business licenses
• Employer Identification Number
Documentation requirements for a WBE include:
• History of business (explaining the start and history of your business, including when, where, why, with whom, and how the business was started/acquired, as well as an explanation of the primary business of the company)
• Professional and business license(s), if applicable
• Resumes of all owners, the board of directors, and the key management team
• Copy of current U.S. passport, U.S. birth certificate, or driver’s license
• Financial statements for the business
• Three years of federal income tax returns (or, for businesses that are less than three years old, personal federal income tax returns)
Spending time in advance gathering the documents you’ll need can save you time in the application process.
3. Starting the Certification Process
Depending on the type of certification you’re seeking and the organization or agency you’re applying through, you can typically do the application online.
For WOSB certification through the SBA, you can either apply through approved third parties, such as the WBENC or WOSB, or self-register on the SBA’s website.
How to Apply to Become a WOSB
Here are the steps you may need to take to become a WOSB:
• Claim your unique Entity ID (UEI) on SAM.gov. Go directly to the official System for Award Management website. Registering your entity on this portal automatically issues your mandatory UEI.
• Create a Unified Login.gov account. Set up an account with the System for Award Management (SAM). This single, multifactor authenticated account replaces the old SBA Connect system for external portal access.
• Complete the application via MySBA Certifications. Log in to this portal using your Login.gov credentials to automatically pull your company details from SAM.gov and officially submit your WOSB digital application.
Once you’ve gotten your UEI number and registered for these accounts, you can apply to become a Woman-Owned Small Business or an Economically Disadvantaged Woman-Owned Small Business, depending on your financial situation.
4. Paying the Application Fee
After you’ve filled out your application and submitted all the necessary documents, you may need to pay a fee to officially submit your application.
Fees vary depending on the type of certification you’re seeking and the organization or agency you are working with, but they tend to be around $350-$400.
Recommended: Minority Business Grants
How Long Can It Take?
Once you submit your application, you can typically expect an on-site visit and interview. The certification and review process can take anywhere from one to three months.
Funding Options for a Minority Woman-Owned Business
Once you’ve gotten certification, there are specific grants and loans aimed at women or minority businesses, and these could provide the financing you need to launch or grow your business.
If you’re looking to raise capital for a woman-owned business, you may also want to explore business grants for women, as well as minority women small business loans.
If you’re a minority entrepreneur, there are several minority small business grants and loans available. Good resources include:
• Minority Business Development Agency
• National Minority Supplier Development Council
• The USDA Rural Business Enterprise Grant Program
Recommended: Hispanic-Owned Business Survey
The Takeaway
Getting certified as a minority- or woman-owned business can give you access to a wealth of opportunities, plus support and resources to grow your company. Many state and federal agencies, as well as many corporations, allocate a certain percentage of projects and contracts to officially recognized minority and women-owned businesses.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
What qualifies a business for minority- or woman-owned certification?
A minority-owned business is one primarily owned and operated by one or more members of a minority group, while a woman-owned business is one in which one or more women control the management of the organization. In both cases, at least 51% of the business must be owned, operated, and run by one or more qualifying parties.
Who qualifies as a minority?
A minority group is generally defined as one with less power, status, or representation than the dominant group, often experiencing discrimination based on race, ethnicity, and religion, among others. In the U.S., this commonly includes Hispanic Americans, African Americans, Asian Americans, Native Americans, and Pacific Islanders.
How do I prove I am a minority?
You must demonstrate your racial or ethnic background. The most common way to do this is to produce the birth or death certificate of a parent or grandparent during the application process.
Photo credit: iStock/Prostock-Studio
SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SOSMB-Q226-029