Women's Business Enterprise (WBE) Certification Requirements
Getting certified as a women owned business can significantly help your business grow by gaining access to new customers or increased business from your existing customers. However, meeting the requirements for obtaining WBE certification can be challenging for a small business. It is important to understand the basic criteria before you start the process.
Where to Apply?
The first step is to determine where to apply for WBE certification based what your goals are in becoming a certified women-owned business. There are several agencies that certify women-owned businesses. While many government agencies will recognize the certification granted by another agency, that is not always the case. If your target customer is a specific governmental unit, you should probably seek certification from that particular government.
Pursuant to the requirements of the federal regulations, 49 CFR Part 26, all federal-aid recipients implement a "one-stop" certification process for Disadvantaged Business Enterprises (DBEs), including WBEs. As a result of this requirement, the following five state agencies, IDOT, City of Chicago, CTA, Metra and Pace, established the Illinois Unified Certification Program (IL UCP).
The IL UCP is based on the concept of reciprocity among the agencies. "One Stop" shopping is provided to DBE program applicants, such that an applicant need only apply once for DBE certification that will be honored by all participating agencies in the IL UCP.
If your target customers are major corporations, your best bet will be to get certification from a third party agency like the Women's Business Enterprise National Council (WBENC), the largest third-party certifier of women owned businesses in the United States. WBENC, a 501(c)(3) non-profit, partners with 14 Regional Partner Organizations to provide its standard certification to women-owned businesses throughout the country. The Women's Business Development Center in Chicago is the WBENC Regional Partner Organization for the states of Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, and Wisconsin.
Knowing your goals in advance will help you select the best agency to process your application for certification.
Certification Criteria
While the process varies slightly from certifying agency to certifying agency, the basic criteria for obtaining WBE certification are generally twofold:
- A majority of the business must be owned by a woman or women
- The business must be managed and controled by a woman or women
Ownership
The applicant business must be at least fifty-one percent (51%) owned and controlled by one or more women who are U.S. citizens or permanent legal residents, or in the case of any publicly-owned business, at least fifty-one percent (51%) of the equity of which is owned and controlled by one or more women who are U.S. citizens or permanent legal residents.
The company's business records need to clearly document this ownership, by providing stock certificates and a stock ledger in the case of a corporation or a signed operating agreement in the case of a limited liability company. Some agencies will also require proof that capital was provided for the equity ownership and may even require documentation showing the source of the capital provided.
Management and Control
The business must also show that a woman or women have management and control of the company. At a minimum, a woman must hold the highest office as outlined in the company's documentation. In the case of a corporation, that typically means that a woman must be president and that women must constitute a majority of the corporation's board of directors. In the case of an LLC, that means that a woman must be the manager or must otherwise be granted operational control in the LLC's operating agreement.
Depending on the nature of the business, the woman business owner will have to demonstrate the expertise, skills and experience necessary to be in actual control of the business. If the business is one that requires the presence of a licensed professional to perform certain critical functions, a woman should have the necessary license.
The business should not have agreements that indirectly have a material affect on the woman's ability to control the business. For example, if the business leases all of its equipment from a business owned by a woman's husband, father, son or brother, it is unlikely that she has sufficient control of her business to obtain certification as a WBE.
Obtaining a WBE certification can be a complex and confusing process. The discussion above highlights only a few of the many pitfalls facing a business seeking WBE certification. Staub Anderson can help you navigate the WBE certification process. For information on the services we offer to women-owned business, please call David Staub at (312) 345-0545.