Criteria to Become a CERTIFIED Disadvantage Business Enterprise (DBE) or a Small Disadvantaged Business (SDB) Entity

A Small or Disadvantaged Business can be women, minority, disabled or veteran-owned business. It is defined as being owned, capitalized, operated and controlled by a member of an identified group listed above. The business must be a for-profit enterprise which physically resides in the United States or one of it territories. For a definition of "Minority groups" please see the definitions as listed on the "Minority" page of this website.

DBE requirements are under the direct jurisdiction of the United States Department of Transportation (US DOT), which is why the process is uniform in every single state. The US DOT is responsible for setting DBE utilization goals and implementation of the program.

The SDB certification strictly pertains to benefits in federal procurement. Said another way, if you want to bid on Federal Contracts, you must be a SDB certified firm, which is different than being a member of the Small Business Administrations 8(a) program.

To qualify as a DBE or SDB, the business must be owned and controlled by one or more socially and economically disadvantaged persons as defined by DBE Regulation 49 CFR Parts 23 and 26. Businesses must show:

  1. Minimum 51% ownership, control, and expertise of the individuals and
  2. Control of the daily management and operations of the individuals

The business size can be measured in one of two ways or a combination thereof: average annual gross receipts three previous years or number of employees. These size standards are based on the North American Industry Classification System (NAICS) code. Industry specific, these limits range from $3.5 million annual gross sales to $17.4 million. Manufacturers, wholesalers and retailers can not exceed an employee size standard which ranges from 500 to 1500 employees.

Recent changes to the DBE regulations now require all applicants (each owner) to complete a Statement of Disadvantage and a Personal Financial Statement. All eligible owners must affirm that they are members of a disadvantaged group (for example, an eligible ethnic minority or female). In addition, the personal net worth of each applicant must be less than $750,000, not including primary residence or ownership equity in the firm.

Generally, certification is done at the local or regional level at your individual local or state's Department of Transportation. In some instances local governments and local state agencies have been establishing a "Unified Certification Program" in which a WBE or MBE will have to meet the general criteria contained here.

Disclaimer: The following are the MINIMUM basic requirements for certification, and in no way guarantee your company will be a successful candidate for certification. Additionally each certifying agency may have different criteria standards and eligibility rules. Other criteria and standards exist for each industry, annual sales, number of employees, etc., etc. If you are applying to a local government entity, we have found on occasion, that the length of time it takes to acquire certification can be inconsistent and that the final status of an application can be offset by other determining factors.

As seen in Inc., Entrepreneur and Crain's Business Magazines