Minority Owned Business Requirements

by Renee Greene ; Updated September 26, 2017

Minorities own more than 4.1 million firms, generate nearly $700 billion in annual revenue and employ more than 7 million workers, according to the U.S. Small Business Administration. To be considered a minority-owned business, the business must be a for-profit enterprise that is owned, operated and controlled by minority group members. Nonprofit companies do not qualify.

Minority Group Members

Minority group members are defined as U.S. citizens who are Asian, Black, Hispanic and Native American. Asian minorities come from India, Pakistan, Bangladesh, Japan, China, the Philippines, Indonesia, Taiwan, Vietnam, Cambodia, Thailand, Micronesia, Fiji, or any of the surrounding areas. Black is considered to be any person with origins in the black racial groups of Africa. Hispanic Americans are those who come from Mexico, Central America, South America, the Caribbean basin, and some Brazilians. Native Americans are those who are part of the North American Indian tribes, Eskimos or Native Hawaiians.

Certifications for Minority Business Enterprises

The National Minority Supplier Development Council (NMSDC) provides Minority Business Enterprise (MBE) certification through local or regional agencies. Certification requires a nonrefundable application fee, an annual fee once certification is obtained and annual renewal. Though no standard certification definition or application exists (though the NMSDC has a standard application procedure), the process provides access to diversity incentives at large corporations and through state and local governments.

Business Size

The size of the business does not factor into certification as an MBE though some advantages and benefits are available only to disadvantaged single-owner and small businesses of less than 500 employees.

Specific Requirements

A minority-owned business must be at least 51 percent owned by minority individuals or, in the case of a publicly owned business, at least 51 percent stock-owned by one or more minority individuals. Minority group members must control the management and daily operations of the company. A qualified business must have an applicant and principals who are of good character (no disqualifying criminal or derogatory conduct in their background), of good business integrity, and have no outstanding significant financial obligations to the federal government, such as unresolved tax liens and defaults on federal loans or other federally assisted financing. MBEs are treated the same as any other business except with certain allowances for being at a sociological disadvantage.

Obtaining Government Contracts

To do business with the federal government, a business must be certified under the 8(a) Business Development Program, registered in the Central Contractor Registration (CCR) database, and have completed the Small Business Supplemental Page. The CCR is a single point of vendor registration and central to the federal procurement process. Generally, the 8(a) program applies to small businesses that are unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character, U.S. citizens and demonstrate potential for success. For state or local contracts, the minority business owner must consult with each individual entity for specific contract requirements.

About the Author

Renee Greene has been writing professionally since 1984 when she began as a news clerk for "The Columbus (Ga.) Ledger-Enquirer." She has written nonfiction books and a book of Haikus. She holds an associate degree from Phillips Junior College and is an English major at Mesa (Ariz.) Community College.

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