If you would like a Hubzone Program eligibility analysis, please take our online hubzone eligibility questionnaire.
You are also welcome to review the basic eligibility requirements below. Generally, to be approved into the Hubzone Program you must meet these basic 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 means the location where the greatest number of the business concern’s employees at any one location perform their work.
(1) If an employee works at multiple locations, then the employee will be deemed to work at the location where the employee spends more than 50% of his or her time. If an employee does not spend more than 50% of his or her time at any one location and at least one of those locations is a non-Hubzone location, then the employee will be deemed to work at a non-Hubzone location.
(2) In order for a location to be considered the principal office, the concern must conduct business at this location.
(3) For those concerns whose “primary industry classification” is services or construction, the determination of principal office excludes the concern’s employees who perform more than 50% of their work at job-site locations to fulfill specific contract obligations. If all of a concern’s employees perform more than 50% of their work at job sites, the concern does not comply with the principal office requirement.
(i) Example 1: A business concern whose primary industry is construction has a total of 78 employees, including the owners. The business concern has one office (Office A), which is located in a Hubzone, with 3 employees working at that location. The business concern also has a job-site for a current contract, where 75 employees perform more than 50% of their work. The 75 job-site employees are excluded for purposes of determining principal office. Since the remaining 3 employees all work at Office A, Office A is the concern’s principal office. Since Office A is in a Hubzone, the business concern complies with the principal office requirement.
(ii) Example 2: A business concern whose primary industry is services has a total of 4 employees, including the owner. The business concern has one office located in a Hubzone (Office A), where 2 employees perform more than 50% of their work, and a second office not located in a Hubzone (Office B), where 2 employees perform more than 50% of their work. Since there is not one location where the greatest number of the concern’s employees at any one location perform their work, the business concern would not have a principal office in a Hubzone.
(iii) Example 3: A business concern whose primary industry is services has a total of 6 employees, including the owner. Five of the employees perform all of their work at job-sites fulfilling specific contract obligations. The business concern’s owner performs 45% of her work at job-sites, and 55% of her work at an office located in a Hubzone (Office A) conducting tasks such as writing proposals, generating payroll, and responding to emails. Office A would be considered the principal office of the concern since it is the only location where any employees of the concern work that is not a job site and the 1 individual working there spends more than 50% of her time at Office A. Since Office A is located in a Hubzone, the small business concern would meet the principal office requirement.
Eligibility Criteria 2:
Your business concern must be at least 51% owned and controlled by persons who are US citizens.
Definition of Ownership means:
- (1) At least 51% owned and controlled by one or more individuals who are United States citizens;
- (2) An ANC or at least 51% owned by an ANC or a wholly-owned business entity of an ANC;
- (3) At least 51% owned by one or more Indian Tribal Governments, or by a corporation that is wholly owned by one or more Indian Tribal Governments;
- (4) At least 51% owned by one or more CDCs;
- (5) A small agricultural cooperative organized or incorporated in the United States, or at least 51% owned by one or more small agricultural cooperatives organized or incorporated in the United States; or
- (6) At least 51% owned by one or more NHOs, or by a corporation that is wholly owned by one or more NHOs.
Definition of Control means both the day-to-day management and long-term decision-making authority for the Hubzone business. Many persons may share control of a concern, including each of those occupying the following positions: officer, director, general partner, managing partner, managing member and manager. In addition, key employees who possess expertise or responsibilities related to the concern’s primary economic activity may share significant control of the concern. SBA will consider the control potential of such key employees on a case by case basis.
Eligibility Criteria 3:
35% of your business concern’s employees must reside in an SBA designated Hubzone. When determining the percentage of employees that reside in a Hubzone, if the percentage results in a fraction, SBA rounds to the nearest whole number.
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- Definition of 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 during the four-week period immediately prior to the relevant date of review, which is either the date the concern submits its Hubzone application to SBA or the date of re-certification.SBA will review a concern’s payroll records for the most recently completed pay periods that account for the four-week period immediately prior to the date of application or date of re-certification in order to determine which individuals meet this definition. To determine if an individual is an employee, SBA reviews the totality of circumstances, including criteria used by the Internal Revenue Service (IRS) for Federal income tax purposes and the factors set forth in SBA’s Size Policy Statement No. 1 (51 FR 6099, February 20, 1986).
In general, the following are considered employees:
- (i) Individuals obtained from a temporary employee agency, leasing concern, or through a union agreement, or co-employed pursuant to a professional employer organization agreement;
- (ii) An individual who has an ownership interest in the concern and who works for the concern a minimum of 40 hours during the four-week period immediately prior to the relevant date of review, whether or not the individual receives compensation;
- (iii) The sole owner of a concern who works less than 40 hours during the four-week period immediately prior to the relevant date of review, but who has not hired another individual to direct the actions of the concern’s employees;
- (iv) Individuals who receive in-kind compensation commensurate with work performed. Such compensation must provide a demonstrable financial value to the individual and must be compliant with all relevant federal and state laws.
In general, the following are not considered employees:
- (i) Individuals who are not owners and receive no compensation (including no in-kind compensation) for work performed;
- (ii) Individuals who receive deferred compensation for work performed;
- (iii) Independent contractors that receive payment via IRS Form 1099 and are not considered employees under SBA’s Size Policy Statement No. 1; and
- (iv) Subcontractors.
Employees of an affiliate may be considered employees, if the totality of the circumstances shows that there is no clear line of fracture between the Hubzone applicant (or certified Hubzone small business concern) and its affiliate(s) (see §126.204).
- Example 1: A concern has 25 employees; 35% of 25, or 8.75, employees must reside in a Hubzone. The number 8.75 rounded to the nearest whole number is 9. Thus, 9 employees must reside in a Hubzone.
- Example 2: A concern has 95 employees; 35% of 95, or 33.25, employees must reside in a Hubzone. The number 33.25 rounded to the nearest whole number is 33. Thus, 33 employees must reside in a Hubzone.
Definition of Reside means to live at a location full-time and for at least 180 days immediately prior to the date of application (or date of re-certification where the individual is being treated as a Hubzone resident for the first time). An employee who resides in a Hubzone at the time of certification (or time of recertification where the individual is being treated as a Hubzone resident for the first time) shall continue to count as a Hubzone resident employee if the individual continues to live in the Hubzone for at least 180 days immediately after certification (or recertification) and remains an employee of the concern, even if the employee subsequently moves to a location that is not in a Hubzone or the area in which the employee’s residence is located no longer qualifies as a Hubzone. The certified Hubzone small business concern must maintain records of the employee’s original Hubzone address, as well as records of the individual’s continued and uninterrupted employment by the Hubzone small business concern, for the duration of the concern’s participation in the Hubzone program.
Example: As part of its application for Hubzone certification, a concern provides documentation showing that 35% of its employees have lived in a Hubzone for more than 180 days. SBA certifies the concern as a certified Hubzone small business concern. Within 180 after being certified, an individual critical to the concern’s meeting the 35% residency requirement moves out of the Hubzone area. That individual will continue to be treated as a Hubzone resident during the first year after the concern’s certification; however, at the time of the firm’s recertification, that individual will not be counted as a resident of a Hubzone.
(1) To determine residence, SBA will first look to an individual’s address identified on his or her driver’s license or voter’s registration card. Where such documentation is not available, SBA will require other specific proof of residency, such as deeds, leases, or utility bills. Where the documentation provided does not demonstrate 180 days of residency, SBA will require a signed statement attesting to an individual’s dates of residency.
(2) For Hubzone purposes, SBA will consider individuals temporarily residing overseas in connection with the performance of a contract to reside at their U.S. residence.
- (i) Example 1: A person possesses the deed to a residential property and pays utilities and property taxes for that property. However, the person does not live at this property, but instead rents out this property to another individual. For Hubzone purposes, the person does not reside at the address listed on the deed.
- (ii) Example 2: A person moves into an apartment under a month-to-month lease and lives in that apartment full-time. SBA would consider the person to reside at the address listed on the lease if the person can show that he or she has lived at that address for at least 180 days immediately prior to the date of application or date of re-certification.
- (iii) Example 3: A person is working overseas on a contract for the small business and is therefore temporarily living abroad. The employee can provide documents showing he is paying rent for an apartment located in a Hubzone. That person is deemed to reside in a Hubzone.
Eligibility Criteria 4:
Your business concern must be classified as a small business as defined by the SBA.
- Definition of Small Business means the business concern, with its affiliates, must meet the size standard corresponding to its primary industry classification.
Eligibility Criteria 5:
A concern must certify that it will attempt to maintain having at least 35% of its employees reside in a Hubzone during the performance of any Hubzone contract it receives, meets the Subcontracting requirements and not be suspended or debarred.
Attempt to Maintain means making substantive and documented efforts, such as written offers of employment, published advertisements seeking employees, and attendance at job fairs and applies only to concerns during the performance of any Hubzone contract. A certified Hubzone small business concern that has less than 20% of its total employees residing in a Hubzone during the performance of a Hubzone contract has failed to attempt to maintain the Hubzone residency requirement.
Subcontracting. At the time of application, an applicant concern must certify that it will comply with the applicable limitations on subcontracting requirements in connection with any procurement that it receives as a certified Hubzone small business concern (see §§126.5 and 126.700).
Suspension and Debarment. In order to be eligible for Hubzone certification and to remain certified, the concern and any of its owners must not have an active exclusion in the System for Award Management, available at www.sam.gov, at the time of application.
