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NYS MWBE Certification Guide

New York State uses its resources to encourage business development. Businesses create jobs and support a healthy tax base. But not all business owners have the same opportunities.

Location, economic disadvantage, and discrimination can constrain certain business owners. New York's small business services promote equality in the opportunities available to Minority- and Women-Owned Business Enterprises (MWBE).

To participate, your business must become a New York State – certified MWBE. Lawyer For Business, a woman-owned law firm in New York State, has experience providing legal assistance for MWBE certification so your business can get the benefits of these programs.

What Is an MWBE Certification?

What Is an MWBE Certification?

An MWBE certification is an approval from New York State saying that it has reviewed your business ownership structure and determined that your business meets the qualifications for its MWBE programs.

The MWBE certification process involves filing an application that gets reviewed by Empire State Development or its contractors to make sure your business meets all the requirements for participation. For New York City businesses, there is an additional MWBE accreditation program, the City of New York Minority and Women-Owned Business Enterprises (M/WBE) program. A New York City business may apply for one, or both, programs.  

What Defines Minority-Owned Business Enterprise (MBE)?

An MBE is a business that is at least fifty-one percent owned, operated, and controlled by people who qualify as a minority group member from the following ancestries:

  • Black African ancestry
  • Native American or Alaskan Native ancestry
  • Latin American ancestry, regardless of race
  • Asian-Pacific ancestry, specifically East Asia, Southeast Asia, or the Pacific Islands
  • Asian-Indian ancestry

Empire State Development only counts minority group members who are U.S. citizens and permanent resident aliens. For example, if you have four equal owners of Asian-Pacific ancestry, one of whom is a citizen and three of whom have applied for green cards, your business will not qualify until the green cards arrive.

What Defines a Women-Owned Business Enterprise (WBE)?

What Defines a Women-Owned Business Enterprise (WBE)?

A WBE is at least fifty-one percent owned by U.S. citizens or permanent resident aliens who are women. Note that you can apply as both a minority and a women's business enterprise if the women owners are also members of a minority group. This includes a sole female owner.

What Are the Business Development Benefits of New York MWBE Certification?

When your business receives MWBE certification, Empire State Development will:

  • Include your business on the list used by New York State agencies and state contracting vendors to meet their MWBE participation goals;
  • Allow participation in lending and bonding programs for Minority- and Women-Owned Business Enterprises (MWBEs);
  • Waive the New York State contract system competitive bidding requirements;
  • Provide access to small business services such as business development workshops, events, training webinars, and technical assistance.

Empire State Development can also forward your MWBE certification to up to three additional agencies, including the NYC Department of Small Business Services, Erie County and the city of Buffalo, and the New York/New Jersey Port Authority. Fast track application services are available to expedite the application process for applicants that have already secured MWBE status through a recognized program.

What Are Qualifications for NYS MWBE Certification?

What Are Qualifications for NYS MWBE Certification?

The qualifications for NYS MWBE certification include:

  • Ownership, operation, and control: All firms seeking MBE, WBE, or MWBE certification must be independently owned, operated, and controlled by minority members and/or women.​ The ownership must be real, substantial, and continuing, and the minority members and/or women must exercise the authority to independently control the day-to-day business decisions;
  • Personal net worth restriction: Each minority or woman owner upon whom certification is based cannot have a personal net worth exceeding $15 Million after allowable deductions. You will submit affidavits to prove your net worth and the value of exemptions like your primary residence and qualified retirement savings plan;
  • Mandatory supporting documents: Each minority or woman owner upon whom certification is based submits current personal and business federal and state taxes, including all schedules, statements, and amendments;
  • Small business restriction: Firms must not employ more than 300 workers. The Division of Minority and Women’s Business Development calculates the number of employees of a business based on the average total employees of the business over four calendar quarters;
  • Independent, active, and at least one year in business: ​The firm must operate independently of other firms and demonstrate it is an active business that has been in operation for at least one year;
  • Out-of-state firms: Out-of-state applicants should be certified as a Minority and Women-Owned Business Enterprise in their home state, if a similar process exists, before applying for NYS MWBE certification.

The applicant bears the burden of proof to demonstrate compliance with the eligibility criteria during the certification process.

If an appeal is needed, such as in the case of a MWBE denial, it is limited to the information before the division at the time of the initial certification process. New York State will usually not consider new evidence. As such, you should “over-include” information, and consult with an attorney prior to submission to ensure you have covered all the requirements sufficiently. An appeal can be time-consuming if not handled quickly. If your application is denied, you may need to wait up to two years before you can reapply for consideration. It is therefore critical to submit a thorough application packet from the start, or to properly handle your MWBE appeal/MWBE denial.

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Current MWBE Certification Challenges

There is an increasing trend where New York State rejects applications during the certification process because the business owner does not perform the business's "primary" labor functions. An eligible business must be minority- and women-owned and operated. This means the owners of a New York State - certified MWBE must be physically engaged in the central labor tasks of the business and/or must have full operational control of the company.

If an MWBE owner has an academic background in business management rather than the business's technical field, New York State might underestimate the owner's capability to control the business or perform the business's labor tasks. This rejection is particularly prevalent in sectors like construction or manufacturing, where physical labor is a significant component of the work. For instance, if a woman owns a construction contracting business but is not personally performing on-site labor, she may be deemed not to be the "true owner."

Similarly, applications by Minority- and Women-Owned Business Enterprises are being denied when the applicant does not provide proof and documentation of expertise. Skepticism by New York State often leads to a rejection on the grounds that the owner lacks the necessary expertise to run the company when the owner's expertise is unrelated to the business's primary services or products.

Applicants might face denials if the state perceives that the documentation provided does not adequately prove the owner's industry expertise or operational control. The application reviewers often expect to see extensive evidence of the owner's hands-on engagement and decision-making in daily operations, beyond just administrative or managerial oversight, to approve a New York State – certified MWBE.

Likewise, denials have increased regarding independence and autonomy. Minority- or Women-Owned Business Enterprises must demonstrate the owner's independence and autonomy in the company.

There may be instances where the relationship between the MWBE business and its clients or affiliates leads to the presumption that the MWBE is not operating independently. This can be particularly challenging for eligible businesses that have spun off from or are closely associated with larger non-MWBE firms or have significant dealings with such entities.

Tips to Overcome These Challenges to Your Application

Tips to Overcome These Challenges to Your Application

Some ways you can either avoid or overcome these questions include the following:

  • Provide clear, comprehensive documentation that substantiates your industry expertise and operational control over the business enterprise;
  • Highlight your autonomy and the independent decision-making authority you hold within your business enterprise;
  • Explain any outside employment or involvement;
  • Match your public-facing materials with the statements in your application;
  • Include a detailed narrative about your business enterprise;
  • Provide supporting documents with your application so you can use them in any appeal.

Review the eligibility requirements with your lawyer to make sure you submit documents to support all of your qualifications as a Minority- and Women-Owned Business Enterprise.

How to Prove MWBE Ownership and Control

MWBE certification is reserved for business enterprises that have proof of ownership and control by minorities or women. The following table summarizes what you need to prove and how you can prove it.

Criteria Evidence to Prove MWBE Control
  • Provide proof of majority ownership by women or minority group members;

  • Ensure that the woman/minority owner receives compensation proportional to their ownership stake;

  • Document that the woman/minority owner enjoys the customary incidents of ownership and shares in the risks and profits.

Suggested documents: articles of incorporation, stock certificates, operating agreement, partnership agreement.
Operational Control
  • Demonstrate that operational decisions are made by the woman/minority owner on a day-to-day basis;

  • Prove the woman/minority owner has the technical competence and working knowledge relevant to the core business activities;

  • Establish that the woman/minority owner exercises authority over critical business decisions independently.

Suggested documents: by-laws, meeting minutes showing election of officers, signing authority resolutions.
Managerial Experience
  • Highlight relevant management experience of the woman/minority owner, specifically in day-to-day management activities;

  • Detail how the woman/minority owner's managerial experience directly relates to the core business functions of the enterprise.

Suggested documents: organizational chart, time sheets, job descriptions, and evidence of daily business decisions.
Technical Competence
  • Show evidence of the woman/minority owner's technical competence in the industry or business area;

  • Provide credentials, certifications, or documented experience that reflect the owner's technical capabilities.

Suggested documents: professional licenses, resumes, certifications, and evidence of day-to-day operations management.
Proportional Profit Sharing
  • Use tax returns, financial statements, and distribution records to substantiate that profits are shared proportionally to ownership stakes;

  • Address any disparities in compensation between majority and minority shareholders.

Suggested documents: tax returns, profit/loss statements, shareholder agreements.
Adequate Managerial and Technical Knowledge
  • Furnish resumes, job descriptions, and other relevant documents to prove the owner’s active engagement in and knowledge of the business’s primary activities;

  • Provide examples or case studies that showcase the owner’s involvement in significant business operations.

Suggested documents: professional licenses, resumes, certifications, evidence of day-to-day operations management.
  • Assert the independence of the woman/minority owner in making business decisions without undue influence from non-minority/male counterparts;

  • Document decisions and instances where the owner's autonomy is clear and decisive.

Suggested documents: lease agreements in the business’s name, evidence of separate financial control (bank accounts), and contracts/work orders under the company’s name.

Mandatory Documents

In addition to the evidence proving ownership and control, your application must also include the mandatory documents listed in the following table to prove you meet the eligibility requirements.

Proof Category Required Documents
Proof of Citizenship and Gender
  • Birth records

  • U.S. passports

  • Military Records

  • Green cards
Sole Proprietorships
  • Assumed Name Certificate from the County Clerk;

  • The most recent year of business taxes.
Proof of Business Activity Current contracts and bids for clients and work in the NYS market area.
Business Documents
  • Certificate of Authority to Do Business in New York State from the New York State
  • Department of State

  • Leases

  • Deeds
Partnership and LLCs
  • Assumed Name Certificate from the County Clerk;

  • Operating/Partnership Agreement;

  • IRS Form 1065 with the Schedule K-1 Tax Form.
Personal and Business Taxes Complete copies of the most recent year of personal and business taxes.
Professional Background
  • Owner’s resume(s)

  • Professional licensure, permits, certifications
  • Shareholders Agreements and Corporate By-Laws;

  • IRS Forms 1120 and 1125-A;

  • IRS W-2 Forms;

  • IRS Form 1065 with the Schedule K-1 Tax Form.

The NY MWBE Application Process

The application process to become MWBE certified in New York State may require effort and legal knowledge, depending on your entity type and ownership structure. Your application must explain to the state how your company is owned and operated in a way that meets the program's eligibility requirements.

Broadly, the application process requires several steps, including the following:

Step 1: Conduct a Self-Assessment

Before you apply to become MWBE certified, review the eligibility requirements. During the self-assessment step, you should:

  • Determine eligibility
  • Gather required documents

Importantly, if you determine your company does not meet the New York State requirements, you should not give up on your application. You may be able to adjust your ownership structure to meet the ownership requirements. You can also adjust your management processes to meet the control requirements.

Step 2: Create NYSCS Account

New York uses an online system to receive MWBE applications. To file an online application, you must first create an account with the New York State Contract System (NYSCS). Creating an account is not the same as filing an application.

Step 3: Complete MWBE Application

Step 3: Complete MWBE Application

To file an application for MWBE certification, you will fill out forms that provide:

  • Personal information
  • Business information
  • Ownership and control details

You will also upload documents to support the information you submitted. Examples of these documents were summarized previously.

Step 4: File Your Application

Before you submit your application to the state, you should review it for accuracy. Again, you may want to consult a lawyer to make sure you prepared your application completely and accurately. Once you are satisfied with your application, you can submit it online.

Step 5: Await Application Review

The Division of Minority and Women's Business Development (DMWBD) will review your application. After ensuring your application is complete and has no obvious issues, the DMWBD might schedule a visit to your company and interview you.

Step 6: Receive Certification Notification

After reviewing your application, you will receive an approval or a denial. If you received a denial, you should consider speaking to a lawyer about your options for appeal.

Let Our Business Lawyer Streamline Your MWBE Application — Contact Us Today!

Let us be your MWBE success partner. Our lawyer's skill fuels your journey. Contact us today for a thriving business tomorrow!

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NYS MWBE Certification: Final Thoughts

An NYS MWBE certification can open doors for minority and women's business development. MWBE-certified companies connect with government agencies and companies in New York State looking to work with Minority and Women-Owned Businesses.

Eligible businesses should put a high priority on becoming MWBE certified. This means presenting a strong application and responding to any rejections. Lawyer For Business can structure your business and submit an application to receive all the benefits of certification. Contact us to learn how we can help you.

Buffalo Business Lawyer Serving New York State
Andrea A. Willis, Esq. is an award-winning attorney that delivers top-notch service to her clients. She has a diverse background representing business clients from many sectors and sizes.

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