Ask business owners about the MWBE designation, and two ideas start competing.
One view - held by men and women, minority and not - is that designating a company as woman or minority-owned is itself a form of discrimination and can appear to be an admission of weakness. Some of you may have left your employers precisely because you felt undervalued, and founded a company because of racial or gender politics at work. The idea of the government formally designating your company as weaker than the next person's can be galling.
Another view – society provides incentives for minority- and women-owned business enterprises to help correct current and historic injustices. Discrimination can be subtle. It’s hard to prove you’ve been hurt by it or not. And the next man – or woman – probably won’t hesitate to sign up if it provides an edge. That’s your competition. Some people believe it is bad business to pass up an advantage like that.
We respect both views. Go make money.
The MWBE designation isn’t all about government contracts, but that’s the most obvious quantitative advantage. Your bids on some government contracts will be given preference of a percent or two in your favor. But the designation also helps private companies to find your business when they’re trying to steer work to MWBE enterprises. Some loan and grant programs target MWBE companies as well.
Five major programs require separate certifications. The minority certification costs approximately $150-175, and it must be renewed annually with the applicable fees. The woman owned certification fees vary depending on the affiliate certification agencies. There is a non-refundable processing fee of approximately $249-279 and must be renewed annually with the applicable fees.
Certifying as Small Disadvantaged Businesses (SDB) and Disadvantaged Business Enterprises (DBE) – both for business owners from disadvantaged backgrounds with relatively modest net worth – is free and can be renewed every three years once you have been certified using the Uniform Certification Application. Both the 8(a) program for business owners with less wealth than the SDB designation and HUB certifications for businesses in distressed economic areas are also free.
Although different agencies have their own processes, it generally takes approximately 90-120 days once a completed certification application is received.
At the federal level, certification review makes sure that a small business is actually owned, controlled, and operated by the applicants, and that the applicants are actually women or minorities. A small business cannot be the dominant player in an industry. But a “small” business can still have as many as 1500 employees and bring in millions in revenue – check the definitions with the SBA for details in your field of work.
A minority-owned business must be a for-profit company, regardless of size, physically located in the United States or its trust territories, which is owned, operated and controlled by minority group members. "Minority group members" are United States citizens who are Asian, Black, Hispanic and Native American. For purposes of NMSDCs (National Minority Supplier Development Council) program, a minority group member is a U.S. citizen with at least 25 percent minority heritage. Most state groups adhere to a similar definition.
The MWBE Web Site has more information.