M/WBE certifications are an excellent tool for small business owners who belong to historically disadvantaged groups. These government-backed certifications provide a high level of support and access for these small businesses, including limited competition on certain contracts and specific tax breaks.
Let’s dive into these two certifications, as well as the requirements needed to apply, the application process, how the RISBDC can help you start and complete your application, and the benefits of gaining M/WBE certification.
What is M/WBE Certification?
M/WBE certification is a way of officially recognizing businesses that are at least 51% owned by socially and economically disadvantaged individuals. State and federal government agencies, including the Small Business Administration (SBA), offer these certifications to promote diversity and offer additional support for “socially and economically disadvantaged” businesses.
In addition to more than fifty percent ownership of the business, minority and women business owners hoping to earn their M/WBE certification must meet a few criteria.
M/WBE Certification Requirements [h3]
Rhode Island businesses can qualify for M/WBE certification with the State of Rhode Island Division of Equity, Diversity & Inclusion (DEDI). The DEDI’s Minority Business Enterprise Compliance Office (MBECO) certifies MBEs/WBEs in Rhode Island on behalf of the private sector and provides a public database of certified MBEs/WBEs.
To be eligible, qualifying businesses, and those applying for M/WBE certification, must be:
- A for-profit company located in the United States.
- 51% owned, operated, capitalized, and controlled by a member(s) of one or more of the socially and economically disadvantaged groups listed below. This individual must be responsible for managing the business’s daily operations.
- Existing businesses whose ownership and control has been transferred to a member of the socially and economically disadvantaged groups below must be in that individual’s control for a minimum of six months prior to applying for WBE certification.
- In business for at least 6 months.
- A legal citizen or lawful permanent resident of the US.
The groups who are presumed to be both socially and economically disadvantaged, as determined and defined by the federal government, include:
- Black: Any racial group originating in Africa
- Hispanic: any group with origins in Mexico, Puerto Rico, Cuba, Central and South America, or other Spanish, Portuguese or Brazilian cultures, regardless of race
- American Indian / Alaskan Native: any groups with origins in any of the original peoples of North America.
- Asian Pacific: any group with origins in the Far East, Southeast, Southeast Asia, the Indian Subcontinent, or the Pacific Islands.
- Women: Any female qualifies as a class of minority.
- Disadvantaged: Other groups or other individuals considered economically and socially disadvantaged by the U.S. Small Business Administration (SBA) under Section 8 (a) of the Small business Act, as amended (15 U.S.C. Chapter 637 (a)).
Women business owners who also belong to a minority racial group can qualify for both an MBE and WBE certification and are encouraged to apply to both designations.
Once you’ve determined if you qualify for an M/WBE certification, you can begin the application process.
RISBDC Can Help With M/WBE Certification Application Process [h3]
The biggest challenge in the application process will likely be compiling, organizing, and completing the necessary paperwork. It’s important to ensure all elements of your documents are accurate and up-to-date so that the whole process moves as quickly as possible. The RISBDC has a team of trained advisors who know this process well. They can explain what direct benefits your business will see from M/WBE certification, and can guide you in avoiding common pitfalls during the application process.
“The RISBDC has been helping our clients with MBE/WBE certification for quite some time now,” said Yashwant Meghare, RISBDC Providence Center Director.
“We attend refresher trainings and make sure we stay updated on any new changes in the application process. While we can typically answer any questions our clients may have during the process, we stay in close contact with the DEDI office and are more than happy to reach out on our clients’ behalf.”
A full list of required documents can be found on the RI Division of Equity, Diversity & Inclusion (DEDI)’s website. In general, the M/WBE application will require your business’s financial and operating documentation, including:
- Corporate federal tax returns for the past 3 years, or if you have been in business less than three years, one or two years of tax returns
- Personal federal tax returns for the past 3 years and personal financial statements for all business owners.
- Debt instruments, including; loans, lines of credit, notes payable, agreements, promissory notes, surety agreements, security agreements, real estate leases, and long-term rental or lease agreements.
- Resumes for all owners, officers, shareholders, directors and key employees.
- Proof of ethnicity / gender (e.g. birth certificate, tribal identification card, etc.)
- Proof of U.S. citizenship and/or permanent resident alien status.
Those seeking M/WBE certification in Rhode Island can find the application, personal financial statement form, no change affidavit form, and W9 form, as well as all required compliance forms, on the State of Rhode Island Division of Equity, Diversity & Inclusion website.
While this process may seem daunting, applying for M/WBE certification is easier than ever with the help of the RISBDC. Not only is our team incredibly knowledgeable about this detailed process, but they will help keep you accountable and on track as you submit the required documents, manage the on-site visits, and prepare for the interviews.
The RISBDC can help you avoid common pitfalls during the application process. We review all of your documentation to ensure everything is in order, there are no errors or missing information, and that your application is submitted on time.
Once you complete your application, becoming M/WBE-certified will offer incredible long-term benefits for your business. Plus, this application gives you a great opportunity to ensure all of your important business and financial documents are accessible and organized for the future.
Benefits of M/WBE Certification
Think of an M/WBE certification as the essential marketing tool your business is missing. Gaining this certification expands your visibility, but above all else, it provides essential access to valuable business opportunities and better-fit purchasers looking to support diversity.
Direct benefits can vary depending on your industry. In general, M/WBE-certified businesses experience:
- Access to more opportunities from firms looking to work with M/WBEs.
- Invites to top business networking events to connect with professionals in their industry.
- Increased credibility among industry peers and prospects.
- Community support for other female or minority business owners and like-minded professionals dedicated to the support of diverse businesses.
“Once [the RISBDC] connected me to the right people, I got my [MBE/WBE] certification,” said Gloria Chacón, owner of Greenview Tree Service. “The RISBDC team is always encouraging me to take the next step. It led me to win an enormous project with the city, which is the first time a minority woman won such a project in Providence!” There’s no denying that these certification applications are time-consuming and require applicants to consistently check their email and communicate in a timely manner. Luckily, the RISBDC has all the resources and expertise you need to help you organize your documents and prepare you for the on-site inspection and interview.
Earning your RI state M/WBE certification will open your business up to a world of new opportunities with better access to valuable contracts, connections to key players in your industry , and increased credibility for your brand, allowing your business to stand out against the competition. Don’t let incomplete paperwork and missed deadlines get in the way of your small business goals. Reach out to the RISBDC today to get help completing your M/WBE certification.
The Rhode Island Small Business Development Center at the University of Rhode Island employs a dedicated, experienced, and knowledgeable staff of business counselors and administrators who can assist you in growing your business. Register now for free, confidential business advice from our advisors here—call (401) 874-7232 to schedule a counseling appointment or attend our free webinars.
