HUBZone is, in many ways, one of the best federal certifications for which certain businesses take advantage. This is because firms located within a HUBZone county generally have an easy time proving and maintaining their HUBZone certification. With the average HUBZone firm earning over $1MM per year in sales, a HUBZone certification can be a great revenue addition to a business.
Many people in HUBZone areas are still unaware of the Rule Changes that occurred in 2020, and how they affect their HUBZone eligibility. The SBA addressed three main areas: 1. Greater Certainty Regarding Eligibility; 2. Improved Contracting Provisions; and 3. Expansion of the HUBZone Program.
HUBZones are in high demand, as the federal government continues to come up short on their HUBZone spending. This means that the average $1MM plus in HUBZone spending per firm is likely to continue to increase for several years.
Greater Certainty Regarding Eligibility
- An employee who resided in a HUBZone for at least six months, at the time of certification or recertification, and continues to reside in a HUBZone for at least six months, may continue to be considered a HUBZone resident, so long as the individual is employed by the firm, even if he/she moves to a non-HUBZone area, or if the area of his/her residence loses HUBZone geographical eligibility.
- HUBZone maps, which were frozen through 2021, will be updated every five years (as opposed to annually), using data from the Census Bureau, the Department of Housing and Urban Development, and the Department of Labor. Areas will continue to maintain HUBZone designation as for a three-year transition period following the expiration of HUBZone Qualified Census Tracts and Qualified Non-metropolitan Counties.
- Small businesses that invest in HUBZones, by purchasing a building or entering into a long-term lease (i.e., 10-year lease or longer) in a HUBZone, may maintain HUBZone certification for a period of 10 years, even if at some point the office location no longer qualifies as a HUBZone, so long as the business continues to meet the HUBZone residency and other requirements of the program.
- Now applications for the HUBZone Certification will be processed within 60 days of a complete submission.
Improved Contracting Provisions
- If a firm is a certified HUBZone small business at the time of its initial offer for a contract, it generally will be considered a HUBZone small business throughout the life of that contract. HUBZone status will no longer be determined as of the time of the award.
- If a firm is HUBZone certified at the time of initial offer for a HUBZone Multiple Award Contract, it will be considered to be certified for each order issued against the contract; if a Multiple Award Contract is not a HUBZone contract, and a procuring agency sets aside an order as a HUBZone award, the awardee must be HUBZone certified, and be designated as such in SBA’s Dynamic Small Business Search engine, at the time it submits its offer for the order.
- Once certified as a HUBZone small business, a firm will be eligible for all HUBZone contracts for which the firm qualifies as small, for one year from the date of its initial certification (and subsequently, for one year after each annual recertification), unless the firm acquires, is acquired by, or merges with another firm during that period.
- Employees temporarily living overseas, in connection with the performance of a contract, will be considered to reside at their U.S. residence, for purposes of determining compliance with the program’s 35% HUBZone residency requirement.
Expansion of the HUBZone Program (beginning January of 2020)
- Permitting Governors to petition the SBA every year to designate rural areas, with populations under 50,000 and unemployment levels of 120% the U.S. or state average, as HUBZones.
- Expanding the “Early Engagement Initiative,” to increase procurement readiness of firms applying for certification, by mobilizing SBA District Offices, Procurement Center Representatives, Procurement Technical Assistance Centers, Small Business Development Centers, economic development authorities, and chambers of commerce to support prospective HUBZone enterprises with the application process.
These rule changes have made it easier for many HUBZone eligible businesses to become certified and maintain that certification. If you would like to find out how your firm can apply for the HUBZone Certification, I always recommend contacting an industry expert such as ez8a or Advance 8a. Neither charge for an initial consultation.