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Hubzone Certification Faqs

The Historically Underutilized Business Zone (Hubzone) program helps small businesses in urban and rural communities gain preferential access to federal procurement opportunities.

These preferences go to small businesses that obtain Hubzone certification in part by employing staff (at least 35%) who live in a Hubzone. The company must also maintain a “principal office” in one of these specially designated areas.

The federal government tries to award at least three percent of all federal prime contracting dollars to historically underutilized business zones (Hubzone) certified businesses each year.

A search of FPDS (Federal Procurement Data System) found that between 10/2/2016 to 9/30/2018 there were 18,524 contract actions totaling $2,511,885,519.12 awarded in the Hubzone program. 

It also limits competition for certain contracts to Hubzone businesses  and gives preferential consideration to those businesses in full and open competition.

The Hubzone program makes your business eligible to compete for the program’s set-aside contracts. Hubzone certified businesses also get a 10 percent price evaluation preference in full and open contract competitions.

Hubzone certified businesses can still compete for contract awards under other socio-economic programs they qualify for.

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.

If you help understanding this requirement please read our article on “Understanding the Hubzone 35% residency and principal office requirements“.

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 an 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.

Again, if you help understanding this requirement please read our article on “Understanding the Hubzone 35% residency and principal office requirements“.

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:
Certify that when performing a Hubzone contract, at least 35% of your employees continue to reside in an SBA designated Hubzone. If your concern is owned by an Indian Tribal Government, 35% of your employees engaged in performing that contract must reside within an SBA designated Hubzone. You must “attempt” to maintain the 35% requirement throughout the life of the contract.

  • Attempt to Maintain
    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 de-certify a firm that does not makes efforts to regain its 35% Hubzone employee requirement.

Keep in mind that each Hubzone Application is unique and document requirements vary for each Hubzone Application.

Below is a general list of items that will need to be included within your Hubzone application. Your unique application may require additional items not specified below.

IMPORTANT NOTE: The electronic verification date for your firm’s HUBZone application is the date on which the applicant authorizes the electronic HUBZone Application for processing by the SBA. 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.

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

Corporate documents: Although your firm may not be required to submit all of 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:

  • DBA (Doing Business As) Certificate, if applicable.
  • 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.)
  • Corporate Bylaws and any amendments.
  • Executed Stock Certificates (front & back).
  • Stock Ledger or Register (This ledger or register should summarize all stock actions taken from issuance through transfer and or cancellation.

If your firm is a Limited Liability Company (LLC):

  • DBA (Doing Business As) Certificate, if applicable.
  • 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 certificate.)
  • Operating Agreement and any amendments.

If your firm is a Sole Proprietor:

  • DBA (Doing Business As) Certificate, if applicable.

If your firm is a Partnership:

  • DBA (Doing Business As) Certificate, if applicable.
  • Partnership Agreement and any amendments.

Documents demonstrating Firm Ownership, any Affiliation and Citizenship:

  • Proof of US Citizenship for owners. One of the following:
    • Birth certificate
    • Current valid U.S. Passport
    • Certificate of Naturalization.
  • Other key ownership related documents:

If your firm is a member of a franchise you will need to provide a copy of the franchise agreement. If your firm is owned in part by an ESOP or Trust you will need to provide a copy of the ESOP plan or Trust Agreement.

Documents demonstrating your firm meets the Hubzone employment and principal office requirements:

  • Firm location list that lists all locations maintained by your firm or used as job sites to include:
    • Complete address for all office locations and each applicable job site location(s).
    • Specification of which of the following 3 location types it is:
      • 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.
      • Other firm location(s): Location(s) maintained by your firm which are NOT the Principal Office.
      • Job site: Firms whose “primary industry” is service or construction should classify as job sites all locations used to fulfill specific contract obligations.
    • A listing of all employees working at the Principal Office.
    • The number of hours that each employee performs their work at the Principal Office location that include the days of week and business hours each office is staffed.
    • The number of hours that each employee performs their work at other office location(s) that 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 job sites, you must provide the requested information for the principal office location and indicate that there are no other locations and or job sites in writing.

  • A Hubzone Map printout of your principal office location.
  • Lease/rental agreement/deed for Principal Office: 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 provide 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.

  • Utility bill for Principal Office:  You must 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, internet 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 within lease/rental agreement or signed affidavit from lessor indicating this is the case.
  • Employee list: You must 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:
    • Full name
    • 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.”
    • Whether or not the individual resides in a Hubzone. This should be supported by the documents specified below regarding Hubzone maps and identification/proof of residence.
    • Number of hours worked per month.
    • Primary work location, e.g., Principal Office, other firm location, OR job site. 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).
    • Working days of the week and hours of principal office.
  • Contractor List (If Applicable):

The SBA may use the totality of circumstances to find that independent contractors are considered employees for the purpose of Hubzone certification.

For each independent contractor that worked at least 40 hours during the month preceding the time of review, provide the contractor’s full name and signed copies of executed contracts.

If signed copies of executed contracts are not available, provide:

  • A detailed description of work performed by each independent contractor including the number of hours worked, the type of work performed, and where the work is performed.
  • Copies of all invoices from each independent contractors, and proof of payment for invoices.
  • Do any of the independent contractors have or have they had in the past, business cards issued by your firm? If yes, provide SBA with a copy of the business card.
  • Do any of the independent contractors have email accounts issued to them by your firm? If so, provide SBA with individual’s email address.
  • Payroll records: You must provide a 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 January 2, 2019. The applicant firm must wait at minimum until the January 31, 2019 payroll is issued before the processing of the application may begin. In this example, you would be prohibited from using the December 31, 2019 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.

  • State and federal employment filings: You must 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.

  • 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:

https://maps.certify.sba.gov/hubzone/map

Once you enter the Hubzone mapping system enter the physical address for each Hubzone employee. Print the page using the Printable Version button on the right side 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 the employee’s name at the bottom of each map and provide a printed map for each employee and do not provide one locator for multiple employees.

  • Identification/proof of residence for Hubzone residents: You must provided a 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 de-certification.
  • Provided the appropriate HUBZone Program Certification Signature Sheet (based on your firm’s ownership structure)

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

Please note that if all of the above 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:

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

Visit https://maps.certify.sba.gov/hubzone/map.

Just input the full street address, city, state and zip code of your business or your employees primary residence address into the SBA mapping system.

The system will automatically determine if any of these locations are located in a 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 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.

You are required to have a separate Dun and Bradstreet (DUNS) profile for each office location where you have a lease or rental agreement.

Your principal office will be determined as the office where the greatest number of employees report to and work out of.

As stated in the basic eligibility requirements, job site’s or client sites are excluded.

The federal government is the largest buyer in the world, but how do you know what agency will buy what you sell?

What do government agencies buy and where to locate opportunities?

The federal government buys everything from office supplies to missiles. No matter what your product or services are, chances are there is a federal agency that buys it. But you can’t sell your products or services to the federal government if you don’t know which federal agencies are buying and what their needs are.

Here are some tips for finding Hubzone contract opportunities:

  • The federal government operates an online service called Federal Business Opportunities, known as FBO or FedBizOpps. This single entry, government wide Web site, https://www.fbo.gov, announces available business opportunities and is a powerful tool to help you become successful in government contracting. The site identifies contract opportunities over $25,000.

You can narrow down your search for Hubzone set-aside contract opportunities or set-up an account to automatically receive targeted opportunities via email. We suggest that you specifically look for Hubzone opportunities that are in the pre-solicitation or sources sought phase as most of the other phases are too far along in the procurement process already.

  • Contact each federal agency’s OSDBU (Office of Small Disadvantaged Business Utilization) office. The OSDBU’s ensure that small and disadvantaged businesses are provided maximum practicable opportunity to participate in the agency’s contracting process. The primary responsibility of the OSDBU is to ensure that small businesses are treated fairly and have an opportunity to compete and be selected for a fair amount of the agency’s contracting and subcontracting dollars.Most OSDBU offices also offer the availability of looking at their procurement forecasts, as well as doing business with guides, organization charts with names and phone numbers for points of contact. Each web site should list the Small Business Specialist’s name and telephone number. Contact the Small Business Specialists at targeted installations to request pamphlets, guides, web sites, bidder’s list applications, etc.

Agencies use a variety of means for purchasing items. Hubzone firms should become familiar with how those buying offices advertise these requirements and then monitor them closely. Most government agencies have common purchasing needs. The government can realize economies of scale by centralizing the purchasing of certain types of products or services.

  • Visit the Federal Procurement Data System web site. It contains every federal procurement that has ever taken place. The web site can be found by visiting https://www.fpds.gov.You can search and find out which federal agency is buying your products or services, the names of your competitors who were awarded past contracts, their dollar value, location, NAICS code and more.

Once you have an idea of who you can sell your products and services to, your local Procurement Technical Assistance Centers (PTACs) (http://www.aptac-us.org/) may offer workshops for small businesses to acquire a basic understanding of the federal government procurement process. Some locations also offer services such as matching a firm’s capabilities with federal solicitations advertised in FedBizOpps, information on subcontracting opportunities, one-to-one technical assistance in completing bid packages and other paperwork, etc.

When Will the Agency Buy It Again?

As stated above, most agencies publish procurement forecasts on their web sites. Procurement forecasts are wish lists of proposed contract opportunities that may or may not come to fruition. Procurement history may be more reliable. If they’ve been buying it for years, they may continue to buy it. You may want to try to identify knowledgeable officials at the buying agency and then ask for their opinions. But again, their information may be subject to change. Much of what an agency buys depends on their budget. You should also develop a good rapport with buying agency officials.

One of the most important things that you have to do next is to convince the buying agency that they should buy from you. If the buying agency is using a competitive procurement process, why should it consider using Hubzone procedures? You must show that your business is competent, capable and reasonably priced. Make it in the buying agency’s best interests to contract with you.

If the buying agency is currently using Hubzone procedures, why should it contract with you and not some other Hubzone firm? How will you provide better service, better quality or better prices? What is it that you can do to either solve the buying agency’s problems, or prevent problems from occurring, or provide insight into problem solving more than any other firm? Show them what you bring to the table.

Selling to the federal government is not that much different from selling to the private sector. It all comes down to marketing. Your Hubzone status is a marketing tool that allows you to get your foot in the door at buying agencies, but you must use the tool wisely. Unless you have an unlimited marketing budget and personnel, you will have to decide which and how many agencies to target. Realistically, an Hubzone company can effectively market only three, four, or at most, five agencies. Which agencies you decide to market will depend on the factors discussed above.

Once your electronic Hubzone Application is authorized for processing, the SBA provides up to 10 business days for the uploading of all supporting documents.

Your SBA reviewer, may at this time, request additional information to answer any questions they have. If you have us prepare your Hubzone Application we prepare all formal responses to the SBA as part of our Hubzone Application Completion Service.

Once the SBA has determined that your Hubzone Application is deemed complete, it will take approximately 90-120 days to be notified of a decision by the SBA.

A business that receives Hubzone Certification has a program term of three (3) years from the date of approval.

The business must maintain its Hubzone Program eligibility during its time in the program and must inform the SBA of any changes that would adversely affect is eligibility. The three (3) year term may be shortened by non-compliance or de-certification.

Hubzone businesses must notify the SBA if their business undergoes any material changes that would affect their Hubzone status. Some examples of material changes include:

  • Change in ownership
  • Change in business structure
  • Change in principal office
  • Falling below the 35% employee Hubzone residency requirement
    The SBA may visit Hubzone businesses unannounced and conduct program examinations. The SBA does this to confirm that businesses continue to meet Hubzone requirements.

A business that completes it three (3) year term can renew its certification every three (3) years.

To register for a Dun and Bradstreet profile please visit http://fedgov.dnb.com/webform. There is no fee to register with Dun and Bradstreet.

You should be able to register for this account and receive a DUNS number very quickly through this link. If you register through http://www.dnb.com it will take longer and they will try to sell you other services you may not need.

Your primary NAICS (North American Industry Classification System) code is the six digit code that your business earned its largest segment of revenue in, in the most recently completed fiscal year. The primary NAICS code help the SBA determine what industry you are operating in and if you are classified as a small business.

Visit the US Census Bureau to help determine your primary NAICS code.

  • You can also view the latest SBA Hubzone Regulations (CFR: Title 13:Part 126) and read up on the extensive rules and regulations that govern the Hubzone Program.
  • You are welcome to view our blog for more frequently asked questions on the SBA Hubzone Program.

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