According to the U.S. Small Business Administration (SBA), the HUBZone program fuels small business growth in historically underutilized business zones. The idea is to award at least 3% of federal contract dollars to eligible companies each year.
To help small businesses, the government limits competition for certain contracts to only those businesses in historically underutilized business zones. The SBA also notes that it gives preferential consideration to those businesses in full and open competition. Joining the HUBZone program makes your business eligible to compete for the program’s set-aside contracts. In brief, the government limits competition for certain contracts to small businesses. Those contracts are called “small business set-asides,” and they help small businesses compete for and win federal contracts.
This is where it gets complicated. You must jump through a number of hoops to prove you’re eligible for the program. According to an SBA list, you have to:
- Be a small business, according to SBA size standards
- Be at least 51% owned and controlled by U.S. citizens, a Community Development Corporation, an agricultural cooperative, an Alaska Native corporation, a Native Hawaiian organization, or an Indian tribe
- Have your principal office located in a HUBZone
- Have at least 35% of your employees living in a HUBZone
These calculations can be difficult, but, fortunately, the SBA provides extensive information on its website, walking business owners through the economic and geographic requirements to get into the program.
What Changes Are Coming?
Periodically, the SBA reviews the identified HUBZones to make sure the program is serving qualified areas. The SBA is changing its map on July 1, 2023. If you’re already in the program or thinking of joining, go to the SBA website to see whether your principal office and employees will still be located in a HUBZone once the new map goes into effect. Most of the map is staying the same, according to the SBA, but there will be some changes.
If you are already in the program and the map changes will remove you, the SBA is making the transition out as easy as possible. If you’re in the program and your zone is no longer in an eligible area, you will still hold your HUBZone status until your next recertification. Certified HUBZone firms that are no longer eligible on July 1 due to the map change may continue to participate in the HUBZone program through to their following annual recertification.
Also, says the SBA, current HUBZone contracts will generally not be disrupted. Firms that were eligible at the time of offer for a HUBZone contract are generally considered to be HUBZone firms throughout the life of that contract.
Whether you’re already in the program or just considering it, explore the SBA HUBZone website and work with qualified professionals to make sure you get all the assistance you’re entitled to.