The HUBZone Program stimulates economic development and creates jobs in urban and rural communities by providing Federal contracting preferences to small businesses. These preferences go to small businesses that obtain HUBZone (Historically Underutilized Business Zone) certification in part by employing staff who live in a HUBZone. The company must also maintain a "principal office" (explained below) in one of these specially designated areas.
To qualify for the program, a business (except tribally-owned concerns) must meet the following criteria:
- It must be a small business by SBA standards;
- It must be owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, or an agricultural cooperative or an Indian tribe;
- Its principal office must be located within a HUBZone, which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act; and
- At least 35% of its employees must reside in a HUBZone.
Existing businesses that choose to move to qualified areas are eligible. To fulfill the requirement that 35% of a HUBZone firm’s employees reside in the HUBZone, employees must live in a primary residence within that area for at least 180 days or be a currently registered voter in that area.
If I own the company applying for HUBZone certification, should I include myself when calculating the number of employees?
Yes. You count regardless of whether you serve in a paid or unpaid status, as long as you consider yourself to be a principal employee of the firm and spend full-time equivalent hours devoted to the business.
The term “reside” means to live in a primary residence at a place for at least 180 days, or as a currently registered voter, and with intent to live there indefinitely. Employers should be aware that it makes no difference which HUBZone their employees reside in. An employee can reside in one HUBZone and work in another and meet the standards for this residency requirement.
It is the location where the greatest number of employees at any one location actually performs their work, except for construction and service industries, which have exemptions based on their occasional need to assign employees at the contract location. The definition for “principal office” can mean something very different from a company’s headquarters. It could happen that a small business might have a headquarters in a non-HUBZone location and establish a principal office within a HUBZone locality and still qualify legitimately for program participation.
If my small business has several offices and one is qualified as a “principal office” that serves as the basis for a HUBZone designation, can all my offices claim HUBZone certification?
Yes, HUBZone is a status that applies to the entire business. This designation will remain in effect as long as any of the firm’s locations meet the test for and are certified as a "principal office" for HUBZone certification (assuming all other eligibility requirements are similarly maintained).
Generally speaking, there are two levels of benefits. The first relates directly to Federal contracts, while the second involves specialized assistance.
Federal Contract Benefits
There are four types of HUBZone contract opportunities:
- Competitive: Contracts can be set-aside for HUBZone competition when the contracting officer has a reasonable expectation that at least two qualified HUBZone small business concerns (SBCs) will submit offers and that the contract will be awarded at a fair market price.
- Sole-Source: HUBZone contracts can be awarded if the contracting officer determines that: only one qualified HUBZone SBC is responsible to perform the contract; two or more qualified HUBZone SBCs are not likely to submit offers; and the anticipated award price of the proposed contract, including options, will not exceed $5 million for a requirement within the North American Industry Classification System (NAICS) code for manufacturing or $3 million for a requirement within all other NAICS codes.
- Full and Open: competitive contracts can be awarded with a price evaluation preference. The offer of the HUBZone small business must not be 10 percent higher than the offer of a non-small business.
- Subcontracting: All subcontracting plans for large business Federal contractors must include a HUBZone subcontracting goal.
Can HUBZone-certified firms receive any special loans, grants or tax credits through the HUBZone Program?
No, the Federal benefits are limited to those listed above.
I have submitted a HUBZone application, but have not received any updates. How can I check the status?
The Online HUBZone Electronic Application has a built-in function that allows an applicant to check the status at any time. Just activate the certification function on the opening page and select the "Check Application Status" operation.
Does this program only apply to small businesses that are currently located in HUBZones, or can firms move to these areas and then become eligible to participate?
This program applies to firms currently located within HUBZones and can include any start-up business that chooses to start operation in a HUBZone. An existing small business that chooses to relocate to a HUBZone can also become certified provided it meets the remaining criteria outlined earlier.
A comprehensive search capability is offered through the Contracting Officer's HUBZone Gateway, which now contains more than 13,000 Certified Small Business Concerns that have expressed an interest in working with the Federal government as HUBZone contractors.
Does a business that attempts to qualify for the HUBZone Program based upon its location on an Indian reservation have to be Indian owned?
No. As long as the principal office of the business is located on an Indian reservation and meets all other eligibility criteria, it can earn the HUBZone designation.
Yes. This dual status can be quite beneficial, so a firm that has one designation and legitimately qualifies for the other is strongly urged to obtain both.