Small Businesses

The BestGovernment Resources for Minority-Owned

a minority-owned small business?

What is

The SBA defines a “minority” as a U.S. citizen who belongs to one or more of the following ethnic groups: African American, Asian, Native American, or Hispanic.

small business The federal government defines a

As an independently owned and operated, for-profit business, which may be known in but does not dominate, its industry. Small businesses have a tangible net worth that does not exceed $18 million.

small business In order for a business to qualify as a

It must meet small business size standards with regard to the annual receipts and number of employees. The SBA provides the following industry size standards for determining if a firm qualifies as a small business.

ManufacturingMaximum number of employees may range from 500 to 1500, depending on the type of product manufactured.

WholesalingMaximum number of employees may range from 100 to 500 depending on the particular product being provided.

ServicesAnnual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided.

RetailingAnnual receipts may not exceed $5 to $21 million, depending on the particular product being provided.

General and Heavy ConstructionGeneral construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction.

AgricultureAnnual receipts may not exceed $0.5 to $9 million, depending on the agricultural product.

Minority-ownedHave to be at least 51% owned by a member of a minority group. Even publicly-owned businesses must have 51% of the stock owned by one or more minorities.

small businesses

Is definitely one reason small businesses fail. But it’s not the only reason. In fact, it’s not even the top reason.

Lack of capital

Is typically identified as the top reason a business failed.Inadequate leadership

•Lack of product demand, low sales •Bad or nonexistent marketing plan •Poor money management •A declining market •Unexpected growth •Fierce competition • Inability to differentiate yourself in the market •Not understanding the needs of your customer

Other culprits include:

As Minority-Owned Business

Getting certified There are two primary methods for firms to obtain minority business certification.

The First Method is bySBA’s 8(a) programWhich provides business development assistance for small businesses owned by “socially and economically disadvantaged” individuals. Federal law defines socially disadvantaged individuals as those who have suffered “racial or ethnic prejudice or cultural bias in American society”.

The second method is bythe National Minority Supplier Development Council Which is a non-profit organization that encourages the success of minority-owned small businesses by providing opportunities for small businesses to sell goods and services to its corporate members. NMSDC currently has a list of 3,500 corporate members.

In order to qualify for minority certification, small businesses must be 51% owned, controlled, and managed by a member of a minority group.The NMSDC considers a minority to be an individual with at least 25% Hispanic, African American, Asian-Indian, Asian-Pacific, or Native American heritage.

The 8(a) Business Development ProgramIts purpose is - to level the playing field between small businesses and big businesses by providing smaller firms with access to human resources, technical resources, contracting opportunities, and capital they otherwise wouldn’t have.

Once accepted into the 9-year program, participants work with the SBA and its affiliates to develop the following:•An SBA-approved business plan •A profitable business model •A unique business identity •A marketing plan for landing contracts

The SBA encourages 8(a) participants to maintain a healthy balance between their public and private sector contracts.Participants receive training, counseling, marketing assistance, and the opportunity to take part in a mentoring program. Participants also get access to SBA-backed loan guarantees and bonding, which can help them get access to bigger contracts.

As part of the 8(a) Business Development Program, the SBA pairs new program participants (protégés) with well-established, successful businesses (mentors) in the private sector.

Mentor-Protégé Program

ProtégéParticipantsGet the benefit of having access to some of the mentor’s resources including human resources, technical assistance, and even financial support. Mentors can help protégés raise capital by investing in protégé companies as long as the mentor acquires no more than a 40% ownership stake in the company.

SBA’s HubZone ProgramThe federal government sets aside 3% of all federal prime

contracting dollars for HubZone-certified companies.

A HubZoneIs a geographic area determined by the federal government to have limited economic growth. These areas are usually urban and rural communities. Firms that are HubZone-certified maintain a principal office in a HubZone and also hire employees who live in that HubZone.

If their business is located in one of these designated areas by checking the HubZone maps. The SBA’s HubZone hotline is available from 2PM to 3PM EST every Tuesday and Thursday afternoon. Call (888) 858-2144 and use access code 3061773.

Business owners canfind out

The SBA’s Surety Bond Guaranty Program provides project owners with the assurance that in the event a contractor fails to deliver on a contract, a surety company will either compensate the project owner for the financial loss incurred or obtain another contractor to finish the job.

Surety Bonds Program

The SBA, through the Office of Surety Guarantees, helps small businesses obtain surety bonds by guaranteeing bonds for contracts up to$5 million.

According to the SBA, there are four types of surety bonds:

1. Bid Bond: Ensures the bidder on a contract will enter into the contract and furnish the required payment and performance bonds if awarded the contract.

2. Payment Bond: Ensures suppliers and subcontractors are properly paid for their services under the terms of the contract.

3. Performance Bond: Ensures the contract will be executed according to the terms and conditions of the contract.

4. Ancillary Bond: Ensures contract requirements that are not performance-related are met.

Often times it’s the case, both in the public sector and private sector, that contractors must be licensed, bonded, and insured in order to bid on and complete construction projects.In fact, the federal government requires contractors, who bid on federal construction projects valued at $150,000 or more, to have surety bonds covering the bid, performance, and payment of contracts.

Small Business Investment Company ProgramUses private investment funds from companies across the nation and guaranteed SBA loans to provide growth capital to small businesses.

independent For-profitcompanies that manage the investment of these public-private funds. While they are regulated by the SBA, each investment company licensed to use SBIC funds has its own criteria for choosing when, where, how, and with whom to invest their funds.

SBICs are

keep in mindSBICs are not allowed to invest in re-lenders, re-investors, passive businesses, real estate businesses, farmland, project financings, or businesses that do not contribute to overall public good.

One thing to

Currently, there are no SBIC licensees located in the following states: Alaska, Colorado, Hawaii, Idaho, Mississippi, Montana, New Mexico, Nevada, South Dakota, Washington, Wisconsin, Virginia, and Wyoming.

The SBA has a directory of SBIC program licensees who service small businesses in 37 states.

Most small business owners find it rather difficult to obtain funding for their businesses. This is particularly true for minority-owned firms, which often fall short of meeting the requirements of a traditional lender.

While the government doesn’t hand out free money, it does provide small business owners with other ways to access capital.

Loan Programs

SBA-backed 7(a) loans are small business loans that provide minority-owned businesses the chance to obtain much-needed funding while minimizing the risk third-party lenders take by funding businesses through the SBA.

7(a) loans

Microloans are small, SBA-backed loans from third-party lenders directly to small businesses. Loan amounts range anywhere from $500 to $50,000. The SBA allows borrowers to use microloans for working capital, inventory, supplies, furniture, and equipment.

Microloans

Borrowers cannot use microloans to purchase real estate or pay off debts. The average loan amount is $13,000 and borrowers have up to six years to repay microloans, usually at an interest rate of 8 to 13%.

Microloans

You can download a state-by-state listing of program intermediaries here.

(BCF) is a business development program overseen by the National Minority Development Council. BCF’s mission is to connect certified minority-owned suppliers with private sector companies.

Business Consortium Fund’s Loan Guaranty/Participation Program

BCF helps eligible certified minority-owned firms to obtain loans from its network of affiliate lenders when they don’t qualify for financing through more conventional programs. BCF facilitated its first loan in 1987.

Business Consortium Fund’s Loan Guaranty/Participation Program

Most of the time, minority-owned small businesses in need of funding and technical assistance, will seek support from non-profit organizations like the NMSDC or from state and local governmental agencies.

Federally–funded state and local programs for minority-owned small firms

Funds 27 MBDA Business Centers (MBCs) across the nation. Minority business enterprises work directly with MBCs to take advantage of consulting services that provide MBEs with insights on getting access to capital, researching different markets, exporting goods, and acquiring contracts in their industry.

Minority Business Development Agency

The SBA’s Program for Investment in Micro-Entrepreneurs funds organizations that help low-income entrepreneurs who are unable to gain access to capital through conventional means to establish or expand their small businesses. These community organizations make loans of $500 to $50,000 directly to minority-owned small businesses.

SBA Prime

PRIME

These loans can be used for working capital, inventory and equipment, real estate, and renovations. For a complete list of SBA PRIME grantees, for fiscal years 2009, 2010 and 2011, you can download PDF reports directly from the SBA’s website.

SBA Prime

PRIME

Most states in the Union have a specific state department that deals with minority-owned small business concerns. Small business owners whose businesses are within close proximity to major U.S. cities can also find opportunities and resources at the local level.

State-run Minority Business Departments

State-run Minority Business Departments

Click here to view a detail contact

information of all available states

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