Summer 2018

Government Programs for Small Businesses By Keith Loria

The U.S. Small Business Administration (SBA) encourages economic development in areas which are light on brick and mortar small businesses, and in 1998 created the Historically Underutilized Business Zones (HUBZone) program, where certified small businesses in impoverished areas can get a boost in bidding on federal contracts.

“These businesses can utilize the competitive and sole source contracting and price evaluation preferences of the program to create jobs and increase capital investments in distressed local economies throughout the U.S.,” says Mariana Pardo, director of the HUBZone program. “The HUBZone Act requires the federal government to try to award 3 percent of all dollars for federal prime contracts to HUBZone small businesses.”

In order for a small business to be certified as a HUBZone company, it must meet one of a set of criteria laid out by the SBA. To qualify, a business must be classified as “small” and then it must also be owned and controlled by one of the following: at least 51 percent by U.S. citizens; by one or more Indian Tribal Governments; an Alaska Native Corporation (ANC) owned and controlled by Natives, or a subsidiary corporation, joint venture, or partnership of an ANC; by one or more Native Hawaiian Organizations (NHOs); oby a Community Development Corporation; or by a small agricultural cooperative or a small business concern owned by one or more small agricultural cooperatives.

Additionally, the business must have a principal office located in a qualified HUBZone and more than 35 percent of its employees must reside in a HUBZone. Those owned by Indian Tribal Governments have further requirements.

While there is a designation for gift, novelty, and souvenir stores under the HUBzone program (Code 453220), hardly any of the 5,100 businesses that are classified with certification are represented as most tend to be in different industries.

Companies such as the Orlando Baking Co., a Cleveland, Ohio-based baking business, Inoventures LLC, an IT firm in McLean, Va., and Mountain Consulting, a Dover-Del.-based construction business, are just a few examples of those taking advantage of the perks of certification.

Still many of the companies represented create products that are sold in gift stores, such as Mona’s Chocolates, sold at the Hoyt Gift Shop in New Castle, Penn., and Rosewood Environmental Art, with products available at the Wildwood Historical Museum gift shop in Omaha, Neb.

Charlene Potter, the Lincoln, Neb.-artist who creates gift sculptures with an environmental slant, and is founder of the latter company, says having the certification has given her small art business credibility and aids in marketing, and business loan approvals. The HUBzone program has also connected her with other opportunities to help her business grow.

“I believe women in business other than art in low-income areas of their communities would benefit more than my own art business,” she says. “I learned about the Nebraska Business Development Center from SBA. I have had a lot more help for my business from the NBDC. They have provided a marketing plan that helps so much.”

Of the 5,100 HUBZone certified small businesses today, approximately 30% of them have received HUBZone contract awards, and many have been awarded subcontracts where the federal government requires prime contractors to meet a certain HUBZone goal to promote economic development in underutilized areas.

While a gift shop may not seem like the ideal business to fit in to this program, Pardo notes that it’s not all about large government contracts and there are instances where these stores may be appealing. For instance, a store that sells items that can be given out come holiday time or one that does a lot of engraving.

“Although the federal government buys almost everything, small business must determine if there is a market in the government for their product or services,” she says. “Businesses can search FedBizOpps (FBO) at https://www.fbo.gov/, to get an idea of the federal procurement opportunities and also consult with local counselors to determine their market reach. A business that is considering applying for HUBZone certification should first develop a strategy for maintaining compliance with the principal office requirement and the 35% HUBZone residency requirement.”

Maintaining compliance with the HUBZone requirements is most critical. The HUBZone office offers eligibility assistance every Tuesday and Thursday from 2-3 p.m., ET via a toll-free number available at www.sba.gov/contracting/government-contracting-programs/hubzone-program.

“Participants influence the topics by their questions,” Pardo says. “HUBZone staff members facilitate the discussion by providing answers and introducing specific topics as time allows. This format offers the opportunity to learn how to maintain eligibility to decrease the possibility of an initial application being declined or being decertified after obtaining HUBZone certification.”

Additional Resources

There are also other government-sponsored programs that can help a small business. For instance, there are hundreds of grants available, and unlike loans, these don’t have to be paid back.

The government also offers a Women-Owned and Economically Disadvantaged Women-Owned Small Business Program, where any company that is at least 51 percent owned and controlled by U.S. females, and primarily managed by one or more women, are eligible. Benefits include joining the women’s contracting program, which makes the business eligible to compete for federal contracts set aside for the program.

Another great resource is the Minority Business Development Agency, which assists minorities in establishing and growing their businesses through grants and other funding opportunities.