What Works for MBEs to Revitalize Local Economies Through the HUBZone Program

The Minority Business Development Agency (MBDA) Federal Procurement Center helps minority-owned businesses successfully navigate the challenges and opportunities to win Federal contracts – through one-to-one training, online counseling, and capacity building assistance.  One of the most valuable Federal small business programs that has not received enough attention, or clarity of value is the Historically Underutilized Business Zones (HUBZone) program administered by the U.S. Small Business Administration (SBA). The goal of the HUBZone program aims to promote economic development and job creation in historically underutilized business areas/neighborhoods by providing access to more Federal contracting opportunities for small businesses located in these designated communities.

In this article, we will explore how the HUBZone program works, and its unique benefits for small, emerging, and Minority Business Enterprises (MBEs). This article will shine light on compelling examples of the program’s impact, and tips for how MBEs can leverage HUBZone certification to spur local economic growth.

Overview of the HUBZone Program

The HUBZone program was launched in 1997 to strengthen small businesses in designated urban and rural communities. To qualify for the program, a small business must meet these criteria:

• Located in a "Historically Underutilized Business Zone", which includes qualified census tracts, qualified non-metropolitan counties, Indian reservations, and military base closure areas.
• Maintain its principal office in a HUBZone.
• 35% of its full-time employees must live in a HUBZone (does not have to be the same HUBZone as the company’s principal office).

Certified HUBZone small businesses gain preferential access to Federal set-aside contracts, sole-source awards up to $4 million, 10% price evaluation preference in full and open contract bids, and ability to partner with other ‘similarly situated’, e.g. other HUBZONE companies for Federal contracts. There are also benefits around small business loans and investment opportunities.

To obtain HUBZone certification, small businesses must apply and provide supporting documentation to the SBA proving eligibility. Recertification is required every 3 years to ensure firms remain compliant. The MBDA Federal Procurement Center recommends hiring an expert in the certification process in order not to get weighed down while trying to capture government contracts.

Unique Advantages for Minority-Owned Firms

The HUBZone program offers several unique advantages for minority entrepreneurs and communities:

Expanded Opportunities

• The 2023 map will be updated again in July 2028 to reflect changes to Qualified Census Tracts (QCTs) and Qualified Non-Metropolitan Counties (QNMCs), in 2026 to reflect expiring Redesignated Areas, and throughout any year to reflect new and expiring Governor-designated covered areas and Qualified Disaster Areas as appropriate. Learn about the different types of HUBZone Designations.
• The HUBZONE Program creates opportunities for government agencies to achieve established 3% contracting goals by identifying and awarding contracts to businesses historically underrepresented in contracting.

Technical Assistance

• SBA, MBDA, and APEX Accelerator Centers offer specialized training and advice to help MBEs qualify and leverage the program.
• The MBDA Federal Procurement Center provides in-scope and out-of-scope vital counseling and technical assistance services, including strategic teaming for purposes of matching HUBZone certified businesses to entities from the 3.5 million businesses that currently qualify for Federal Government set asides, and 2 million non-for-profit organizations that potentially align with and/or support the HUBZone program mission.

Local Impact

• Supports MBE growth in areas needing more economic opportunity.
• MBEs hiring from local communities stimulates jobs and growth.

Insights from Minority Business Owners

Minority entrepreneurs using HUBZone certification voice the tangible benefits and positive impacts:

"HUBZone was a game changer for us. The program enabled my Hispanic-owned construction firm to win four times more government contracts last year alone." - Diego M., Albuquerque, NM

"As an African American woman-owned manufacturer, HUBZone helped us tap into contracts that were out of reach before. We’ve hired dozens of employees from the local community as a result." - Tanya P., Memphis, TN

"Being in a rural tribal area, we struggled to get opportunities. HUBZone let us compete for Federal contracts to help grow and diversify the Nation’s economy." - John T., Cherokee Nation principal chief

These perspectives reinforce how transformative the HUBZone program can be for minority small businesses.

Maximizing HUBZone Benefits for Small and Emerging MBEs

Based on MBDA's experience assisting minority firms, here are tips to make the most of HUBZone certification:

• Consult SBA advisors - Ask questions to ensure full compliance and maintain eligibility.
• Leverage contracting preferences - Pursue set-aside contracts; highlight certification in bids.
• Partner strategically - Team with other firms to go after larger contracts.
• Promote certification - Communicate HUBZone status to government and corporate buyers.
• Reinvest locally - Use contract revenues to build community, expand jobs, and empower small businesses.

Proactively optimizing all advantages of the HUBZone Program can spur a small, emerging, MBE's growth as well as local economic impact.

The Future of HUBZones

On October 17th, 2023, in Baton Rouge, the MBDA Federal Procurement Center and the HUBZone Contractors National Council signed an MOU designed to increase the number of HUBZone contractors who receive technical assistance to win more Federal contracts, and to help Federal Agencies to meet their 3% goals to award contracts to HUBZone businesses.

Both organizations, since October’s MOU signing have been hard a work on the mutually shared mission to:

• Improve the program, especially in underserved communities.
• Increase funding and staffing to expedite application processing.
• Add more urban census tracts that qualify for HUBZone designation.
• Track and report data on participation by minority-owned firms.
• Promote initiatives to foster mentorship between large and small minority-owned businesses.

The HUBZone program provides a proven, powerful vehicle for small, emerging, and minority-owned businesses to access more Federal contracts, spur job creation, and deliver economic growth in areas both untapped, and hungry for investment. MBEs that obtain certification and strategically leverage the benefits of the HUBZone program can expand while uplifting their local communities. To learn more about how the HUBZone program can work for your business, contact the MBDA Federal Procurement Center at https://mbdafpcenter.com.