SBA HUBZone Certification Frequently Asked Questions

what is hubzone certification

What is the SBA HUBZone Program?

The Historically Underutilized Business Zones (HUBZone) program was enacted into law as part of the Small Business Reauthorization Act of 1997. The program falls under the auspices of the U.S. Small Business Administration. The program encourages economic development in historically underutilized business zones - "HUBZones" - through the establishment of preferences.

SBA's HUBZone program is in line with the efforts of both the Administration and Congress to promote economic development and employment growth in distressed areas by providing access to more federal contracting opportunities.

What are the benefits of the HUBZone Program?

Federal Agencies are required to award 3 percent of their prime contracts to qualified HUBZone small business concerns. Firms that are HUBZone certified by the SBA are eligible for the following Federal procurement preferences:

Benefit 1: Application of a 10 percent price evaluation preference in full and open competition, for requirements above the simplified acquisition threshold. In such cases, the price offered by a HUBZone firm will be deemed lower than the price offered by the lowest, responsive large business offeror, as long as the HUBZone firm’s price is not more than 10 percent higher than the price offered by that offeror.

Benefit 2: Award of contracts set-aside for competition among HUBZone certified firms.

Benefit 3: Negotiation of sole source contracts if the contracting officer determines that: only one HUBZone certified firm can satisfy the requirement; the anticipated award price of the contract is not more than $5.5 million for manufacturing requirements, and not more than $3.5 million for all other requirements; the vendor is responsible with respect to performance; and the award can be made at a fair and reasonable price.

Benefit 4: While there is no specific goal for award of subcontracts to HUBZone certified firms, construction contracts exceeding $1 million, and all other prime contracts exceeding $550,000, must include, to the extent practicable, subcontracting plans that provide opportunities for HUBZone certified firms.

What are the basic HUBZone eligibility requirements?

Eligibility Criteria 1:

Your business concern's principal office must be located in a qualified SBA designated HUBZone. Search the SBA's Mapping system and verify if your principal office is located in a qualified SBA designated HUBZone.

Definition of Principal Office:

Principal office is defined as the location where the greatest number of the business concern's employees at any one location perform their work. However, for those business concerns whose primary industry is service or construction, the determination of principal office excludes the business concern's employees who perform the majority of their work at job-site locations to fulfill specific contract obligations.

Eligibility Criteria 2:

Your business concern must be at least 51% unconditionally and directly owned and controlled by persons who are US citizens.

Definition of Unconditionally and directly owned and controlled:

Unconditionally and directly ownership means directly owning at least 51% of the business concern. Ownership must be direct and cannot be through another business or trust, unless the trust is revocable and you are the sole grantor and trustee of the trust. Control means both the day-to-day management and long term decision making authority for the business concern. Generally, you should be the highest ranking officer of the business too.

Eligibility Criteria 3:

35% of your business concern's employees must reside in a SBA designated HUBZone.

Definition of Employee and Reside:

Employee means all individuals employed on a full-time, part-time, or other basis, so long as that individual works a minimum of 40 hours per month. This includes employees obtained from a temporary employee agency, leasing concern, or through a union agreement or co-employed pursuant to a professional employer organization agreement. SBA will consider the totality of the circumstances, including criteria used by the IRS for Federal income tax purposes and those set forth in SBA’s Size Policy Statement No. 1, in determining whether individuals are employees of a concern. Volunteers (i.e. individuals who receive deferred compensation or no compensation, including no in-kind compensation, for work performed) are not considered employees. However, if an individual has an ownership interest in and works for the business a minimum of 40 hours per month, that owner is considered an employee regardless of whether or not the individual receives compensation. Reside means to live in a primary residence at a place for at least 180 days, or as a currently registered voter, and with the intent to live there indefinitely.

Eligibility Criteria 4:

Your business concern must be classified as a small business as defined by the SBA.

Definition of Small Business:

Small business means the business concern, with its affiliates, must meet the size standard corresponding to its primary industry classification.

Eligibility Criteria 5:

This means that the business can fall below 35% without withdrawing, and losing its contract but must be making efforts to return to the 35% number, such as posting employment positions, etc. The SBA can decertify a firm that does not makes efforts to regain its 35% HUBZone employee requirement.

What type of Information will need to be collected and provided to the SBA?

ITEMS REQUIRED FOR HUBZONE CERTIFICATION

Please find below a detailed description of the information and documentation your firm must submit to validate the information provided within your entire HUBZone application. Your collection and careful review of these materials is necessary in order to ensure your HUBZone application is successful.

IMPORTANT NOTE: The electronic verification date for your firm’s HUBZone application is the date on which the applicant completes and verifies the electronic verification part of your HUBZone Application. The verification notice will be sent to the firm via electronic communication by the SBA after completing the HUBZone electronic Application. This date is extremely important to note as outlined below under items 7, 8, 9 and 10 below.

Documents demonstrating your firm meets Ownership & Control and Size requirements:

1. Corporate documents. Although your firm may not be required to submit the following documentation to the Secretary of State, in your state, it is nonetheless required and necessary to determine the eligibility criteria for the SBA HUBZone Program. Failure to provide these documents will result in your application being withdrawn or declined by the SBA.

The following documents must be provided, each of which must be valid at the time of electronic verification and have all required signatures:

IF YOUR FIRM IS A CORPORATION:

a. DBA (Doing Business As) Certificate, if applicable. If this document is not applicable, you must note as such in writing to the SBA. Failure to provide a response to this request will cause a delay in the processing of the application.

b. Articles of Incorporation and any amendments (Only submitting the Secretary of State (SOS) seal certificate is not acceptable. You must also submit a copy of the firm’s Articles of Incorporation along with the SOS seal certificate.)

c. Corporate Bylaws and any amendments.

d. Executed Stock Certificates (front & back).

e. Stock Ledger or Register (This ledger or register should summarize all stock actions taken from issuance through transfer and or cancellation.

f. Certificate of Good Standing (This certificate can be obtained by contacting your applicable Secretary of State office. This certificate is not the same as the Articles of Incorporation Certificate requested in (b) above). Please note, this is sometimes referred to as a Certificate of Fact or Status in some states. In addition, if your firm is not in good standing with the state, your firm will need to rectify this issue immediately.

IF YOUR FIRM IS A LIMITED LIABILITY COMPANY (LLC):

a. DBA (Doing Business As) Certificate, if applicable. If this document is not applicable, you must note as such in writing to the SBA. Failure to provide a response to this request will cause a delay in the processing of the application.

b. Articles of Organization and any amendments (Only submitting the Secretary of State (SOS) seal certificate is not acceptable. You must also submit a copy of the firm’s Articles of Organization along with the certificate with the SOS seal.)

c. Operating Agreement and any amendments.

d. Certificate of Good Standing (This certificate can be obtained by contacting your applicable Secretary of State office. This certificate is not the same as the Articles of Organization Certificate requested in (b) above). Please note, this is sometimes referred to as a Certificate of Fact or Status in some states. In addition, if your firm is not in good standing with the state, your firm will need to rectify this issue immediately.

IF YOUR FIRM IS A SOLE PROPRIETOR:

a. DBA (Doing Business As) Certificate, if applicable. If this document is not applicable, you must note as such in writing. Failure to provide a response to this request will cause a delay in the processing of the application.

IF YOUR FIRM IS A PARTNERSHIP:

a. DBA (Doing Business As) Certificate, if applicable. If this document is not applicable, you must note as such in writing. Failure to provide a response to this request will cause a delay in the processing of the application.

b. Partnership Agreement and any amendments.

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Documents demonstrating Firm Ownership, any Affiliation and Citizenship:

2. Business Tax Returns. Provide Federal Business Income Tax Returns for the applicant firm AND all of its affiliates identified in the application for the most recently available previous 3 years, or as many as the firm has, if less than 3 years can be provided for the business.

NOTE EXCEPTION: Firms with a primary NAICS code which requires that the Small Business size determination be based on employees (vs. revenue) need only provide the most recently available yearly Federal Business Tax Return. However, in addition to that tax return, such firms must also provide the most recently available 12 months of quarterly unemployment reports.

Note: These documents must be provided for the applicant firm AND all of its affiliates identified in the application.

3. Personal Tax Returns for significant owners. Provide Federal Personal Income Tax Returns for the most recently available year (2012) for ALL owners of the firm who have 20% or more ownership of the firm, including all attachments and schedules. Also provide W2’s for all individuals listed on the return.

Please Note: If no one individual owns 20% or more, then the Personal Tax Returns need to be provided for each individual with ownership.

4. Proof of US Citizenship for owners. Provide any ONE of the following documents for every firm owners who are US Citizens to demonstrate that the applicant firm is at least 51 percent owned and controlled by United States citizens: (Do NOT send Social Security cards.)

a. Birth certificate,

b. Current valid U.S. Passport, or

c. Certificate of Naturalization.

5. Other key ownership related documents.

If your firm is a member of a franchise, provide a copy of the Franchise Agreement. If your firm is owned in part by an ESOP or Trust, provide a copy of the ESOP plan or Trust Agreement. If the firm has no such agreements; you must indicate in writing that none of the above is applicable. Failure to provide a response to this request will cause a delay in the processing of the application.

NOTE: Please review Section C of the HUBZone electronic application to ensure that all who are board members, officers and/or stockholders named in the documents requested above have been properly identified in your application, as omitting such key individuals is a common cause of application processing delays. If after reviewing Section C you find that corrections are required, please contact the individual who sent you the request for documentation to have your application corrected.

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Documents demonstrating your firm meets HUBZone Employment and Principal Office requirements:

6. Firm location list. Provide a complete list of all locations maintained by your firm or used as jobsites. Please provide the following information for the principal office, all locations and jobsites. This listing must include the following for EACH location:

a. Complete address for all office locations and each applicable jobsite location(s).

b. Specification of which of the following 3 location types it is:

1) Principal Office: Location maintained by your firm (i.e. owned or leased by your firm) where the greatest number of your firm’s employees at any one location perform their work.

2) Other firm location(s): Location(s) maintained by your firm which are NOT the Principal Office.

3) Job site: Firms whose “primary industry” (see 13 CFR 121.107 ) is service or construction (see 13 CFR 121.201 ) should classify as job sites all locations used to fulfill specific contract obligations.

a. Provide a listing of all employees working at the Principal Office.

b. Provide the number of hours that each employee performs their work at the Principal Office location.

c. Please include the days of week and business hours each office is staffed.

d. Provide the number of hours that each employee performs their work at other office location(s).

e. Please include the days of week and business hours each office is staffed at other office location(s).

Please Note: If the firm only operates from the principal office location and there are no other locations or jobsites, please provide the requested information for the principal office location and indicate that there are no other locations and or jobsites in writing. Failure to provide responses for the principal office location, other locations and any jobsite locations will cause a delay in the processing of the application.

7. Lease/rental agreement/deed for Principal Office. Provide a copy of a fully executed lease/rental agreement or deed for the firm's Principal Office location which is valid and in full effect at the time of electronic verification of your application. Your firm’s full legal name must be identified as being the lessee, renter, or owner. If your lease/rental agreement or deed only includes a parcel description, you must also provide a property tax bill and/or insurance policy supporting the physical address of the Principal Office location.

If you operate out of your primary residence, you must provide a copy of the deed for your primary residence, a copy of a utility bill that covers the period of time including the electronic verification of your application. Examples include gas, electric, water, sewer or landline telephone. Cellular phone bills are NOT acceptable . You must also provided a copy of the firms insurance policy too.

Note. A property tax bill and/or insurance policy is for verification of the physical address only. Submission of this document in lieu of the required lease or deed is not acceptable.

8. Utility bill for Principal Office. Provide a copy of a utility bill for the firm’s Principal Office that covers the period of time including the electronic verification of your application. Examples include gas, electric, water, sewer or landline telephone. Cellular phone bills are NOT acceptable . If utilities are included with the rent and you cannot provide a land-line telephone bill, you must provide evidence that utilities are included with the rent, e.g. lease/rental agreement or signed affidavit from lessor indicating this is the case.

9. Employee list. Provide a complete listing of all who work for the firm at the time of electronic verification. including paid or unpaid owners, salaried or hourly-wage employees, and temporary workers. If an individual has an ownership interest in and works for the business a minimum of 40 hours per month, that owner is considered an employee regardless of whether or not the individual receives compensation. This listing must include for each individual:

a. Complete name

b. Description of type of worker, e.g. salaried, included in payroll, owner, leased, obtained through PEO, obtained through union agreement, shared with affiliate, temporary, etc.

Note. Some individuals may require multiple designations in the description, “owner, salaried, included in payroll."

c. Whether or not resides in a HUBZone – This should be supported by the documents specified below regarding HUBZone maps and identification/proof of residence.

d. Number of hours worked per MONTH.

e. Primary work location, e.g. Principal Office, other firm location, OR jobsite. If the individual works at more than one location, select the location where the individual spends the single greatest portion of their time. (As an example, if an employee works 16 hours per week at the “Principal Office,” 12 hours per week at an “other firm location,” and 12 hours per week at a “job site,” specify the Principal Office as the primary work location).

f. Working days of the week and hours of principal office.

Note. This listing is separate from the official payroll record and must include all items (a) through (f) for each individual. Failure to provide this listing with all the information as requested is a common cause of application processing delays.

10. Payroll records. Copy of your firm’s official payroll record from a time period which covers the date of electronic verification and shows at a minimum the employee's name, number of hours worked for that pay period, and wages with taxes and adjustments. (Salaried employees who do not have hours worked specified are assumed to work 40 hours per week.) This payroll record must clearly show the pay period’s beginning and end dates, not just the pay date. Do NOT submit a combined summary of all the pay periods. Each pay period will need to be provided on a separate payroll record.

Note. In order for the SBA to consider a person working for your firm to be an employee, we must have evidence from your payroll records that the person works at least 40 hours in a month’s time. All payroll records submitted must be for the time of electronic verification and PRIOR.

For example: If Payroll is paid on the 30th of the month and the application is submitted on June 2, 2013. The applicant firm must wait at minimum until the June 30, 2013 payroll is issued before the processing of the application may begin. In this example, we would be prohibited from using the May 30, 2013 payroll date because that date does not include the electronic verification date. For any employees working less than 40 hours in the payroll period which includes the date of electronic verification, you must also provide enough immediately previous payrolls to demonstrate that those employees work at least 40 hours in a month’s time. As an example, if you have a weekly payroll system and an employee who works 10 hours the week of electronic verification, you would need to provide the 3 previous weekly payrolls in order to demonstrate that the person works 40 hours per month for a total of 4 weekly payrolls. The latest of these 4 contiguous payroll periods should include the date of application submission.

Failure to provide payroll records meeting the above described requirements is a common cause of application denial.

11. State and federal employment filings. Provide complete copies of your firm’s most recently available state unemployment tax filing and the most recently available federal employment quarterly report (Form 941- Employer's Quarterly Federal Tax Form). The state unemployment report must include the employee listing supporting the summary of wages.

If the firm has not filed any of the above reports, you must note as such in writing. Failure to provide a response to this request will cause a delay in the processing of the application.

12. HUBZone maps of HUBZone residents’ addresses. Copies of the HUBZone Map to verify each HUBZone employees’ residence is in a HUBZone. In order to provide the HUBZone map for each employee, select the following link:

You will then enter the physical address for EACH HUBZone employee. Print the page using the Print page option at the top of the screen. Print the page exactly as it is displayed including the personal address for each individual. Altering the HUBZone Map or not providing the entire printout will make the document invalid. Please write legibly the employee’s name at the bottom of each map. Provide a printed map for EACH employee. Do NOT provide one locator for multiple employees.

13. Identification/proof of residence for HUBZone residents. Copy of a VALID (unexpired) Department of Motor Vehicles driver's license, Department of Motor Vehicles Identification card, or voter's registration card for each of the firm's HUBZone resident employees. Do NOT send Social Security cards. The copy must be legible and show the employee’s full name and address. If the address listed is no longer valid or is a PO Box, you must also provide a copy of a current lease agreement, mortgage statement, utility bill (not cell phone), or change of address card in the name of the individual which shows the HUBZone address where the individual resides. Failure to provide sufficient proof of HUBZone residency for employees could lead to your firm being proposed for decertification.

Document required to certify, under penalty of perjury, that all information and documentation submitted is true, accurate, and complete:

14. Please select and print the appropriate HUBZone Program Certification Signature Sheet (based on your firm’s ownership structure) by using one of the following links:

a. HUBZone Program Certification for Applicants Owned by ANCs

b. HUBZone Program Certification for Applicants Owned by CDCs

c. HUBZone Program Certification for Applicants Owned by Indian Tribal Governments

d. HUBZone Program Certification for Applicants Owned by Small Agricultural Cooperatives

e. HUBZone Program Certification for Applicants Owned by U.S. Citizens

This form must be signed by an officer of the firm authorized to represent the applicant, notarized, and mailed in hardcopy. This form must be mailed in hard copy form. An email or faxed copy of the Program Certification Signature Sheet will NOT be accepted.

Please note that if all of the supporting documentation being requested is not received within the allotted time frame, your application may be withdrawn or declined. Failure to submit information and documentation within the allotted time frame is a common cause of applications being withdrawn or declined. Please make note of your submission deadline.

Other Key Tips:

1. You must have a current SAM.GOV. SBA DSBS (Dynamic Small Business Search) and Dun and Bradstreet (D&B) profile for your business. All profiles must match the address of principal office of the firm.

2. You must identify your primary NAICS code within your SAM.GOV and DSBS Profile.

3. If you use independent contractors, you must provide:

a. The complete name(s) of all independent contractor(s);

b. Signed copies of all executed contracts;

c. Detailed description of work performed by all independent contractors including the number of hours work, the type of work performed, and where they perform their work.

d. Copies of all invoices from the independent contractors, and proof of payment for all invoices;

e. If any of the independent contractors have or have had in the past, business cards issued by your firm, please provide a copy of the business card;

f. If any of the independent contractors have email accounts issued to them by your firm, please provide the individual’s email address.

If this document is not applicable, you must note as such in writing. Failure to provide a response to this request will cause a delay in the processing of the application.

How do I find out if my business is located in or my employees reside within a SBA designated HUBZone tract?

Yes. A startup company can apply for HUBZone Certification and get certified as long as it meets all of the HUBZone eligibility requirements listed and can provide the required items needed by the SBA.

Yes. If you operate out of your primary residence, you must provide a copy of the deed or rental agreement for your primary residence and a copy of a utility bill that covers the period of time including the electronic verification of your application. Examples include gas, electric, water, sewer or landline telephone. Cellular phone bills are NOT acceptable. You must also provided a copy of the firms insurance policy too.

Note: A property tax bill and/or insurance policy is for verification of the physical address only. Submission of this document in lieu of the required lease or deed is not acceptable.

Yes. If an individual has an ownership interest in and works for the business a minimum of 40 hours per month, that owner is considered an employee regardless of whether or not the individual receives compensation.

Source: www.cloveer.com

Category: Insurance

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