Eligibility and Certification

To qualify for the HUBZone program, a business must meet four requirements:

• It must be a small business.
• It must be owned and controlled only by U.S. citizens.
• The principal office of the business must be located in a "historically underutilized business zone."
• At least 35 percent of its employees must reside in a HUBZone.

Existing businesses that choose to move to qualified areas are eligible. To fulfill the 35 percent requirement, employees must live in a primary residence within that area for at least 180 days or be a currently registered voter in that area.

Warning Caution If you are a one-person business and your office is located in a HUBZone, but you don't reside in the HUBZone, you do not qualify!

To be designated a "HUBZone," an area must also meet certain criteria. It must be located in one or more of the following three areas:

• a qualified census tract (as defined in the Internal Revenue Code of 1986)
• a qualified "non-metropolitan county" (as defined in the Internal Revenue Code of 1986) with a median household income of less than 80 percent of the State median household income or with an unemployment rate of not less than 140 percent of the statewide unemployment rate, based on U.S. Department of Labor recent data
• a federally recognized Indian reservation.

The certification process is fully electronic, Internet-based, and integrated with CCR. The SBA will verify eligibility and make sure that ownership, location, and employment percentage requirements are satisfied. The average time for processing is approximately 30 days, and SBA's decision will be in writing.

To apply, companies are encouraged to use the electronic application directly on the HUBZone web site. Applicants can also submit a paper copy to SBA headquarters in Washington, D.C. Applicants can download the paper version from the web site or obtain it from any local SBA district office.

Computer mapping software available on SBA's web site allows firms to search a database to determine whether or not they are located in a qualified HUBZone. The system allows searches by address, county or town and displays metropolitan areas, Indian reservations and areas that qualify by income, unemployment rate, or both.

For further information and to find out if your location is in a HUBZone, you can visit the SBA web site at https://eweb1.sba.gov/hubzone/internet/.

SDB, 8(a) and HUBZone Compared

The SBA administers three core certification programs for small businesses: the Small Disadvantaged Business Program (SDB), the 8(a) Business Development Program, and the HUBZone Program. All three are designed to help small businesses market themselves to both large business and government procurements. However, not every small business can participate in these programs. To participate, a business must meet specific criteria and must be certified by SBA that these criteria have been met.

Benefits Compared

There are some major differences in the benefits of the SDB, 8(a), and HUBZone programs. SDB and HUBZone are essentially contractor programs designed to expand economic opportunity for disadvantaged businesses. In contrast, 8(a) is a business development program that provides a broad scope of assistance to disadvantaged firms, including personalized business counseling. Under the program, each 8(a) certified company is assigned a Business Opportunity Specialist (BOS) who advises and coaches the company in business matters. There is no such benefit in SDB and HUBZone.

Only the HUBZone Program specifically promotes business opportunities in distressed communities. Small businesses not located within these areas may be eligible for certification in the SDB or 8(a) BD Programs.

Certification Requirements Compared

To be certified for the SDB, 8(a), or HUBZone programs, a business must demonstrate that it meets the basic requirements for admission. Although there are differences in the requirements for each, there is one universal requirement for all of these programs: the business must be classified as small.

For SDB and 8(a) certification, a business must generally show that it is unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States. In addition, the net worth of the individual claiming economic disadvantage may not exceed the limit set by law. For SDB eligibility, net worth must be less than $750,000, excluding the value of the business and personal residence. For initial 8(a) eligibility, the net worth of an individual claiming disadvantage must be less than $250,000, excluding the value of the business and personal residence. For continued 8(a) eligibility after admission to the program, net worth must be less than $750,000. (Note that companies that are 8(a) firms automatically qualify for SDB certification.)

For HUBZone certification, your business must be located in a qualified HUBZone area. A pre-determined percentage of employees who work for the company must also live in a HUBZone.

Application Process Compared

You can apply to all three certification programs and, under the right circumstances, you could conceivably qualify for all three; for example, if you were an 8(a) eligible business located in an Historically Underutilized Business Zone.

Although you can apply to all three programs, there is no universal application. Each core program has its own application form and specific process for certification. However, all three certification programs require similar information along with your application, including such items as personal financial statements, previous tax returns, SBA forms, and IRS forms.