6 Benefits of Certifying as a Minority Contractor

Subcontractors
August 17, 2021

Simply being a minority contractor doesn’t necessarily qualify you for the benefits of that status. Minority-owned contractor businesses must be certified by outside entities in order to claim the benefits. Certification helps contractors get opportunities that aren’t available to other companies. 

We’re going to look at the advantages of certification, the minimum qualifications, and where you can get certified. But first, we need to clarify what is considered a minority.

What is a minority?

There are seven groups that are considered minorities in the United States:

  • Hispanic or Latino Americans
  • Black or African Americans
  • Asian Americans
  • Arab and other Middle Eastern Americans
  • Native Americans and Alaskan Natives
  • Native Hawaiians
  • Other Pacific Islanders

Women are also considered a minority, but usually have separate certifications for their businesses.

Minority contractor benefits

1. Set aside contracts

Many government agencies and corporations have specific contracts they set aside for minority contractors. Governments often have quotas to meet to show they are providing work for all their constituents, including minorities. Corporations also award contracts specifically to minorities to show their support for diversity.

Contractors can take advantage of these opportunities by bidding or connecting with government entities or corporations that specifically request minority contractors. There’s less competition for these contracts, meaning you have a better chance of getting the job.

2. Proves credibility

In order to become certified as a minority contractor, there is a review process. The certifying body has qualifications you must meet in order to be certified. Also, they generally require the submission of documents to show that you’ve been in business for a few years.

Since an outside organization is reviewing your documents and certifying that you are a minority contractor, companies and governments see this as an approval of your business and are more willing to go to contract with you.

3. Important for your customer

Many government entities and corporations are increasingly tracking their minority contractor use. With renewed focus on equality, they’re motivated  to employ minority contractors whenever possible. By certifying your company, you make it easier for them to do business with you.

Some governments and corporations are requiring their purchasing departments to meet quotas on the use of minority contractors, potentially creating a boom for your company, if you meet their needs.

4. Access to grants and loans

Many small and minority companies don’t have access to the advantages that non-minority-owned businesses do, such as loans and access to credit. By registering and certifying as a minority-owned business, you can gain access to government grants and loans that other companies can’t access. You could use this money to expand your business by purchasing equipment or hiring more workers, to take on more work.

5. Access to training

When you are certified as a minority contractor, you’ll gain access to training and mentorship programs through governments and corporations. For example, the SBA hosts a mentor program for minority-owned businesses to help them compete for government projects. Many companies are investing funds in minority firms, even providing direct investment dollars to help them grow their businesses. You may also be invited to special events that will allow you to network with purchasers. 

6. Marketing

Marketing yourself as a minority contractor allows you to get attention from general contractors who are looking for subcontractors to meet their diversity needs. By stating that you are a certified contractor, you can take advantage of opportunities that other businesses don’t get.

Qualifications for certification

The qualifications for minority contractor certification will vary depending on who is providing the certification. Overall, there are certain qualifications that are constant across all programs:

  • Owners must all be US citizens
  • At least 51% of ownership must be by minorities
  • Your business must be a for-profit business located in the US or its territories
  • The management and daily operations of the business must be by minority members of management

If your company meets those requirements, it’s worthwhile to research the different certification paths available. Some require you to have been in business for a certain amount of time, others do not. Some charge a certification fee, and  others don’t. Research carefully before deciding which is correct for you.

Certifying institutions

There are several ways to become certified as a minority contractor. Which one you choose will depend on your goals for your business and which types of clients you want to attract.

National Minority Supplier Development Council (NMSDC)

NMSDC is the largest national certification body in the US. Its certifications are used by 17 states and 25 cities. There are also several corporate members who use the database to find contractors.

SBA 8(a) program

The Small Business Administration has a program for disadvantaged businesses of all types, including socially and economically disadvantaged, women-owned, and those found in economically depressed communities. Registering with the SBA gives you access to federal contracts that are set aside for small, disadvantaged businesses.

State programs

Several states have their own certification process for minority businesses, like Oregon and Ohio. Certifying through these programs will get you access to state projects that are specifically for minority contractors.

City programs

Some cities, like Chicago, have their own certification process for minority businesses that allows you access to programs and projects.

Conclusion

Whether you intend to go after government projects or not, certifying as a minority contractor can be extremely beneficial. Private companies are striving to increase their use of minority contractors, which opens more opportunities. You’ll also get access to financial resources and training and mentorship programs that can help you build your business. Certifying also improves your credibility and can be used as an asset in your marketing strategies.

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