Today, women-owned businesses makeup about 39.1% of all U.S. firms, employ 12.2 million people, and generate $2.7 trillion in revenue nationally, per the Wells Fargo 2024 Impact of Women-Owned Businesses Report. It is undeniable that women-owned businesses have a significant impact in the economic realm. With the development of Women Business Enterprise (WBE) Programs and the SBA Women-Owned Small Business (WOSB) Federal Contract Program, this impact will only increase. However, there are essential eligibility requirements, application requirements, and other benefits to certification that you need to know before obtaining Ohio WBE or SBA WOSB certification.
Ohio Women Business Enterprise Program
Ohio’s WBE Program was developed with the intention to encourage, nurture, and support the growth of women-owned businesses. To be eligible for certification as a WBE, the business must:
- Be owned and controlled by a woman who is a U.S. citizen and has established residency in the state of Ohio or a reciprocal state;
- Have been a business for at least one year before applying;
- Be at least 51 percent women-owned.
The application for certification as an Ohio WBE requires several complex legal and tax documents from the business itself and the 51 percent owners. These documents include but are not limited to, state and federal tax returns for both the business and the 51 percent owners, business tax forms including Schedule K-1 and/or Form 1065, 1120, or 1120s or Schedules C or C-EZ for the past three years or the life of the company, balance sheets, cash-flow statements, profit and loss statements, etc.
Further, the application requires different documents for various business entities. For example, the state will require a Partnership to apply for WBE certification to supplement its Partnership Agreement. Still, it will require an LLC to apply for WBE certification to supplement its Unit Certificates and Unit Journal or Ledger.
There are several benefits to obtaining WBE certification. First, suppose your business obtains WBE certification in Ohio. In that case, you can use that to apply for certification with reciprocal states and, therefore, do business in those states as a WBE-certified business. Further, a WBE-certified business is listed in a searchable database, opening your business up to more contracting opportunities that may not have otherwise been available.
WBE certification gives your business access to several resources that can assist you in finding opportunities for your business, such as federal, state, and local contracting and subcontracting opportunities, accounting and auditing assistance, business and marketing plan development, evaluations of company operations and management processes, etc.
Lastly, obtaining WBE status in Ohio makes your business eligible for the WBE Loan Program. This Program provides an alternative source of financing for women-owned small businesses that may otherwise need to have traditional lending sources available to them. Some favorable parameters of the WBE Loan Program include:
- A maximum loan amount of $500,000 and a minimum loan of $45,000.
- A term of up to ten (10) years for loans issued for machinery and equipment and up to fifteen (15) years for owner-occupied real estate loans.
- Fixed interest rates of up to 3% and a rate of 8% upon default.
Obtaining WBE certification may open your business up to opportunities it may not have had access to.
SBA Women-Owned Small Business
The eligibility requirements for SBA WOSB status provide that the business must:
- Be a small business according to SBA size standards (this includes…);
- Be at least 51 percent owned and controlled by women who are U.S. citizens;
- Have women manage day-to-day operations and make long-term decisions.
SBA also provides certification for Economically Disadvantaged Women-Owned Small Businesses. In addition to meeting the above requirements, the business must:
- Be owned and controlled by one or more women, each with a personal net worth of less than $850,000;
- Be owned and controlled by one or more women, each with $450,000 or less in adjusted gross income averaged over the previous three years;
- Be owned and controlled by one or more women, each with $6.5 million or less in personal assets.
Similarly to Ohio WBE certification, the SBA WOSB application requires the business to supplement several complex legal and tax documents. To apply for WOSB status, you will need to supplement documentation of ownership of the business and the owners’ proof of citizenship, and if your business has already qualified for another SBA-approved third-party organization, evidence of that existing certification will also be required. Again, SBA will require different documents to be supplemented depending on the business entity. Thus, it is imperative that you know how your business is classified, whether a Corporation, LLC, Partnership, etc., and that you have all the documents relative to its classification.
The benefits of obtaining WOSB status through SBA are similar to those offered by the state. WOSB is a Federal Contract Program created to even the playing field for women business owners in competition for certain contracts. These contracts are for goods and services in industries where women-owned businesses are often underrepresented. However, it should be noted that these benefits only apply to federal contracting opportunities rather than those in the private sector.
Benefits to other businesses
WBEs and WOSBs are not the only entities that benefit from such certification. Businesses not certified but partner with WBEs and WOSBs can also benefit from this certification. Working with a WBE or a WOSB may provide federal tax incentives for your business. Further, your business may be opened to diverse markets and further its economic growth in different communities. Thus, even if your business is not eligible for WBE or WOSB certification, you should consider doing business with a certified company.
Obtaining certification as an Ohio WBE or an SBA WOSB may be a great way to advance your business. It can open doors and provide opportunities to those businesses certified as WBEs and WOSBs, but businesses ineligible for certification who engage in transactions and partnerships with certified businesses may also benefit.
Applying for certification can be a complex process that requires several different tax and legal documents. The certification process may need assistance to ensure compliance with application requirements. The experienced attorneys at Cavitch, Familo, and Durkin can assist businesses who may be eligible for WBE and/or WOSB certification to obtain that certification.
If you need assistance in obtaining WBE or WOSB certification, contact Milica Prica or Michael R. Rasor for more information at 216-621-7860.
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