Frequently Asked Questions

General Questions

Which regulations describe the HUBZone program?

You can read the HUBZone regulations here.

Where can I find a list of HUBZone certified firms?

The official "list" of certified firms is contained within the Dynamic Small Business Search. You can run a search to produce a list of certified firms by clicking this link, The database search results are limited to 5,000 firms but there are typically more than this number of certified HUBZone firms so you will have to limit your search by geography, industry, or other conditions in order to produce the required list.

Each firm's DSBS profile has two fields relevant to HUBZone certification. "HUBZone Certified?" will indicate by a YES or NO whether the firm in question is currently certified. A marked YES for this question on a company's profile is official evidence that the firm is certified. An approval or recertification letter is NOT valid evidence that a firm is currently certified, since a firm may have been decertified since the notice was issued. The other relevant field is the “HUBZone Certification date.” The date given indicates only the initial date of certification and does not reflect the dates of any recertification process, which is internal to SBA.

We also note that small businesses submitting an offer on a HUBZone sole source or set-aside contract, or where the HUBZone price evaluation preference will be applied, acknowledge that a prospective HUBZone awardee must be a HUBZone small business concern at the time of award. Further, these offerors must notify a contracting officer of any material change notice sent to SBA that occurs before contract award, which could affect its eligibility.  See 52.219-3 – Notice of HUBZone Set-Aside or Sole Source Award and 52.219-4 – Notice of Price Evaluation for HUBZone Small Business Concerns (Jan 2011).

I created a profile in SAM and the Dynamic Small Business Search.  Why can’t my customers find my firm’s profiles?

You may have opted out of public display of your record within SAM. To fix this, you need to update your SAM record. Under the Core Data section, you can change this setting under the Information Opt-Out tab.

For more information visit the SAM user guide.

Is there a HUBZone logo that HZ SBCs can use/incorporate into their website and other marketing material? 

SBA does not have a HUBZone logo in circulation.  Additionally, the SBA does not lend its logo for private use, as that might be perceived as an endorsement.

My firm is in a HUBZone area but it has not applied for HUBZone certification from SBA.  Can I display in our website that the firm is in a HUBZone?

It is only appropriate for firms currently certified as a HUBZone small business concern by the SBA to present themselves as “HUBZone” concerns.  Please be advised that any small business concern that is determined by the Administrator to have misrepresented the status of that concern as a "HUBZone small business concern" shall be subject to the penalties defined in the Small Business Act. See 15 U.S.C.A. § 657a(c)(4). Furthermore, SBA’s regulations set forth the potential penalties for misrepresenting one’s status as that of a HUBZone concern.  13 C.F.R. § 126.900.

Do I have to keep copies of the documents that I submitted as part of my firm’s HUBZone application? If so, which documents, and for how long?

Yes, you have to retain copies of documents demonstrating compliance with HUBZone eligibility requirements for a period of 6 years from the date your firm submitted its application for certification as a ‘qualified HUBZone small business concern.’  This includes documents that you uploaded to SBA as part of the application process, documents supporting any assertions you made to SBA, and any documents that SBA may have subsequently requested in processing your firms application.

Example:  A firm was certified on 11/16/12.  It must retain documents that it uploaded to SBA as part of the application process, documents supporting assertions it made to SBA, and documents that SBA subsequently requested in processing its application through 11/15/2018. 

Do I have to keep copies of the documents that support my firm’s continuing eligibility under the HUBZone Program? If so, which documents, and for how long?

Yes, you have to retain copies of documents demonstrating your firm’s continuing compliance with HUBZone Program eligibility requirements for a period of 6 years from the date you submitted these documents to SBA, or used these documents to support assertions of continued compliance with HUBZone Program requirements.

Example:  A firm was certified on 11/16/12.  On its 3rd year anniversary, 11/16/15, the firm electronically recertifies its continuing compliance. Although this recertification is made online, and SBA does not collect supporting documentation, the firm analyzed financial records, payroll documents, copies of HUBZone maps, copies of leases, copies of drivers licenses and voter registration cards, etc., to conclude that on 11/16/15: (1) was a small business; (2) it was at least 51% owned by U.S. citizens;  (3) its principal office was located in a HUBZone; and, (3) at least 35% of its employees resided in a HUBZone.  On 9/23/20, SBA conducts a program exam and requests evidence of compliance on 1/16/15 and on 9/23/20 (i.e., time of review).  While the firm submitted proof of compliance with all HUBZone Program Requirements on 9/23/20, it failed to retain, and was unable to provide to SBA, copies of the documentation it used to support its recertification of 11/16/15. Even though it was able to provide documentation demonstrating compliance on 9/23/20, because it failed to provide documentation supporting its recertification of 1/16/15, the firm would be decertified.

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Initial Application General Questions

What supporting documents will I need to submit?

You will be required to submit different supporting documentation based on your ownership structure:

You must submit a signed program certification sheet based on the type of ownership:

We encourage all applicants to use these lists to begin assembling supporting documentation prior to the formal request from the HUBZone Program. However, please DO NOT SEND ANY DOCUMENTS TO THE HUBZONE PROGRAM PRIOR TO THAT FORMAL REQUEST OR THEY WILL BE DESTROYED.

I am submitting an application for a business that is owned by a Native Hawaiian Organization (NHO).  I began to fill in the online application but had to stop because I don’t know where to place that information.  Please assist.

The online application is in the process of being updated to accommodate these types of ownership structures.  In the meantime:

  1. Select corporation, LLC, or partnership (sole proprietorship is usually not a type of ownership NHOs use).  In Section C – Ownership and Control, enter the NHO name and the name and title for each individual. 
  2. Once the highest ranking official authorizes the online application for processing, include a memo to SBA in the supporting documentation for ownership and control that you will upload. 
    • In the memo, answer “Yes” or “No” to the following questions:
      • The applicant firm is:
        1. wholly owned by one or more Native Hawaiian Organizations
        2. owned by a corporation that is wholly owned by one or more Native Hawaiian Organizations
        3. owned in part by one or more Native Hawaiian Organizations
        4. owned by a corporation that is wholly owned by one or more Native Hawaiian Organizations, if all other owners are either United States citizens or SBCs

How long does it take to be certified?

Complete applications are finalized in about 90 days. It may take more or less time depending on the specifics of your application. See the application timeline for a more specific breakdown.

Can I get an update on the status of my application?

Follow these steps to check the status within the General Login System:

  1. Go to https://eweb.sba.gov/gls/dsp_login.cfm.
  2. Enter your User ID and password
  3. Click on the HUBZone icon
  4. Click on HUBZone Electronic Application
  5. The status will be displayed under the application number.

My firm is certified. Where is my certificate?

The HUBZone program office does not issue certificates. When you submit bids for HUBZone contracts, contracting officers are required to confirm your HUBZone certification by searching for your firm in the publicly available Dynamic Small Business Search (DSBS). Your firm's profile will reflect whether you are HUBZone certified and if so, the date that you were certified. This part of your profile is automatically populated by the HUBZone program.

Is there a paper application or a sample application?

No, but there is this application guide which can help you prepare to submit the online application.

The online application says that my principal office is NOT in a HUBZone, but I know that it is. What can I do?

You may describe the discrepancy in the "dispute box" below Section A of the application. You may then proceed with filling out the application. To verify that the address is in a HUBZone, you may be required to submit a signed statement from a county or local government agency certifying the census tract number and county of the address in question.  The statement must be on official letterhead from the county or local government agency.  You may also be requested to send documentation such as copies of maps used by the county representative to determine the census tract and county.  If you are experiencing an error with the HUBZone maps, please refer to the FAQ "The HUBZone Maps incorrectly plotted my address. Can you fix the map?" below.

Can my business qualify for HUBZone certification if we just moved into a HUBZone?

An existing business that chooses to move to a qualified HUBZone area is eligible so long as:

  • It is small by SBA standards;
  • It is owned and controlled at least 51% by U.S. citizens, a Community Development Corporation (CDC), an agricultural cooperative or an Indian tribe;
  • At least 35% of its employees reside in a 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

Can the HUBZone office expedite my application?

To ensure fairness to all applicants, the HUBZone applications are processed on a first come/first serve basis.

 

Initial Application Processing Questions

In processing applications for HUBZone certification, as of what date does SBA determine the firm’s eligibility?

The date that the firm electronically verifies its application (‘electronic verification date’) is critical – it is the date that the applicant asserts to SBA that it is in compliance with HUBZone Program eligibility requirements. Much of SBA’s analysis of an application relates to that date. However, in order to receive HUBZone Program benefits – eligibility for contract preferences - regulations require that the concern be in compliance with program eligibility requirements.

Therefore, if, after it electronically verifies its application, an applicant finds that it is not in compliance with eligibility requirements, it should immediately withdraw its application. Note that in this event, the concern can re-apply as soon as it comes into compliance with eligibility requirements.

Also, it should be understood that SBA cannot certify a firm that is not compliant with eligibility requirements at the time SBA determines eligibility (i.e., issuance of a decision letter by the Director, HUBZone Program, or his/her designee). Therefore, even if an applicant was in compliance on the date of electronic verification, if SBA finds that it is no longer in compliance, it will decline the application.

Example:  Firm submits evidence that 40% of the applicant’s employees reside in a HUBZone at the time it verifies its online application.  Sixty days later, the census tracts where these employees live cease to be qualified (i.e., they are no longer designated as HUBZones).  SBA declines the application because the applicant has zero employees residing in a HUBZone. 

In processing applications for HUBZone certification, does SBA take into consideration decline or withdrawal of an applicant’s prior applications? 

No, SBA does not take withdrawal, or decline, of the firm’s prior application(s) into consideration in making an eligibility determination on a current application. That is, each application stands on its own merit, based on the factual information contained in the on-line application at hand, the corroborative documentation submitted as part of the application process, and any information subsequently requested by, and submitted to, SBA. 

In processing applications for HUBZone certification, what does SBA do if the applicant does not submit any corroborative documentation identified in the Document Request List? 

The firm has 10 business days from the date that it electronically verifies its application to submit required corroborative documentation.  If the firm does not submit any documentation, and does not request an extension of this 10 day period, SBA will administratively ‘close,’ the application. If an application is so closed, the company can submit a new application at any time. That is, the firm does not have to wait 90 days, as it would have to, if its application were declined.

Upon request, SBA will provide an additional 10 business days for the firm to submit required documentation. Such request should be emailed to the HUBZone Help Desk athubzone@sba.gov(link sends e-mail), and in the subject line include the Application Number and the words ‘DOCUMENT REQUEST-EXTENSION.’ 

In processing applications for HUBZone certification, what does SBA do if the applicant submits some, but not all, corroborative documentation identified in the Document Request List?

  1. If the firm submits some, but not all, required corroborative documentation, SBA will follow up with the applicant, and provide a reasonable opportunity (i.e., 5 business days) for the applicant to submit the omitted documentation, explain why omitted documentation could not be submitted, or request one 5 business day extension. If the firm submits the previously omitted documentation, SBA will continue processing the application.
     
  2. If the firm does not submit substantially all of the previously omitted documentation, and does not request an extension, SBA will advise the applicant by email that based on the corroborative information at hand, if the application were processed to conclusion, the Agency would be compelled to draw an adverse inference regarding compliance with eligibility requirements. That is, the omission of documents would prevent SBA from validating that the firm meets regulatory requirements, and would compel it to conclude that the firm does not. If no response is received from the applicant within two business days (48 hours), SBA will close-out the application in behalf of the applicant.
     
  3. If the applicant requests an extension, and subsequently submits substantially all of the previously omitted documentation, SBA will resume processing the application at the conclusion of the extension period based on documentation at hand at that time (i.e., including any documentation submitted during the extension period).
     
  4. If the firm requests and extension, but does not submit substantially all of the previously omitted documentation, SBA will advise the applicant by email that based on the corroborative information at hand, if the application were processed to conclusion, the Agency would be compelled to draw an adverse inference regarding compliance with eligibility requirements. That is, the omission of documents would prevent SBA from validating that the firm meets regulatory requirements, and would compel it to conclude that the firm does not. If no response is received from the applicant within two business days (48 hours), SBA will close-out the application in behalf of the applicant.

In any event, SBA may request information or documentation in addition to that contained in the Document Request, in order to reach an eligibility determination. If the applicant cannot provide the required documentation contained in the Document Request or the additional information requested within the time frames stipulated, the firm may ask that its application be withdrawn. In this event, the business can submit a new application at any time. That is, the firm does not have to wait 90 days, as it would have to, if its application were declined.

What period of time must the payroll records that the firm submits cover? 

The SBA uses the firm’s payroll records to determine several things, including whether specific individuals are ‘employees,’ as defined for the HUBZone Program; whether the majority of the employees work from the HUBZone ‘principal office’ as defined for the HUBZone Program; and whether at least 35% of firm’s employees reside in a HUBZone.     

The date that the firm electronically verifies its application (‘electronic verification date’) is critical.  This is the date that the applicant asserts to SBA that it is in compliance with HUBZone Program eligibility requirements. For this reason, the payroll records must include the date of electronic verification. 

Examples: 

  • Applicant electronically verifies its application on 11/17 (electronic verification date), and submits payroll records for the period 11/15-11/28.  Because 11/17 – the electronic verification date - falls within the period covered by the payroll, it is acceptable to SBA for use in determining compliance with HUBZone Program eligibility requirements. 
  • Applicant electronically verifies its application on 11/17 (‘electronic verification date’), and submits payroll records for the period 11/1-11/14.  Because 11/17 – the electronic verification date – does not fall within the period covered by the payroll, it is not acceptable to SBA for use in determining compliance with HUBZone Program eligibility requirements on that date. 

Further, if the applicant employs individuals that work the minimum 40 hours per month, SBA must review sufficient payroll records to allow it to conclude that an individual does, or does not, work for the firm the requirement minimum monthly hours to determine whether specific individuals meet the HUBZone Program definition of ‘employee’. So, in addition to submitting the payroll for the period that includes the electronic verification date, the firm must submit payroll records for the period immediately preceding. 

Examples:

  • Applicant electronically verifies its application on 11/17 (‘electronic verification date’), and submits payroll records for the period 11/15-11/28, and for the period 11/1-11/14.  Because the second payroll immediately precedes the payroll that includes 11/17 – the electronic verification date, it is acceptable to SBA in determining whether specific individuals work at least 40 hours per month, and are ‘employees,’ as defined for the HUBZone Program. 
  • Applicant electronically verifies its application on 11/17 (‘electronic verification date’), and submits payroll records for the period 11/15-11/28, and no other payroll.  Because the applicant did not submit sufficient payroll records to enable SBA to determine whether specific individuals work at least 40 hours per month, it is not acceptable to SBA for use in determining whether specific individuals are ‘employees,’ as defined for the HUBZone Program.  SBA will determine the number of employees using the 11/15-11/28 payroll records and those individuals listed as having worked less than 40 hours will not be included as employees. 

My firm is very small, and I have not yet established a payroll system.  What type of documentation do I maintain instead in order to prove compliance with the principal office and the 35% employee HUBZone residency requirement?

In order for you to determine if your firm meets the principal office and the 35% employee HUBZone residency requirement, you have to be able to get an accurate count of the number of employees your firm has. For more information read the FAQs in the “Who is Considered an Employee?” section and listen to the HUBZone Mini-Primer on  Principal Office and 35% Employee Residency.

For purposes of HUBZone eligibility, you must have evidence that the person works at least 40 hours per month. Your records, regardless of what they are called (e.g., ‘payroll,’ ‘payroll summary,’ ‘payroll report,’ etc.), must show all your employees, and the number of hours each worked per month, at the time of review - for initial applications, this date is called electronic verification date (EVD). Your documents must show, at a minimum the person’s name, the number of hours worked for each pay period, the wages for each pay period, and the beginning and end dates for each pay period.  

What period of time must documentation ‘cover,’ to support or corroborate the firm’s occupancy of its ‘principal office?’ 

The date that the firm electronically verifies its application (‘electronic verification date’) is critical.  It is the date that the applicant asserts to SBA that it is in compliance with HUBZone Program eligibility requirements. For this reason, documentation supporting or corroborating the applicant’s occupancy of an address that it asserts is its ‘principal office,’ must be in effect on the date of electronic verification. 

Examples: 

  • Applicant electronically verifies its application on 11/17, and the principal office lease was executed on the preceding 9/1, and covers the ensuing 12 months. This is acceptable to SBA, for use in determining the applicant’s ‘principal office,’ because it was in effect on 11/17, the electronic verification date.
  • Applicant electronically verifies its application on 11/17, and the principal office lease was executed on the succeeding 11/30, and covers the ensuing 12 months. This is not acceptable to SBA, for use in determining the applicant’s ‘principal office,’ because it was not in effect on 11/17, the electronic verification date.

What period of time must documentation ‘cover,’ to support or corroborate an employee’s residency in a HUBZone?’ 

The date that the firm electronically verifies its application (‘electronic verification date’) is critical – it is the date that the applicant asserts to SBA that it is in compliance with HUBZone Program eligibility requirements. For this reason, documentation supporting or corroborating an employee’s residency in a HUBZone must be in effect on the date of electronic verification. 

Examples: 

  • Applicant electronically verifies its application on 11/17, and submits an employee’s driver’s license to corroborate his/her residency in a HUBZone. The license was issued on the preceding 6/1, and covers the ensuing 48 months. This is acceptable to SBA, for use in determining the employee’s HUBZone residency, because it was in effect (valid) on 11/7, the electronic verification date.
  • Applicant electronically verifies its application on 11/17, and submits an employee’s driver’s license to corroborate his/her residency in a HUBZone. The license expired on the preceding 9/30. This is not acceptable to SBA, for use in determining the employee’s HUBZone residency, because it was not in effect (valid) on 11/7, the electronic verification date.

After the firm submits documents per the Document Request, does SBA ever contact the applicant to request more information?

SBA contacts the firm when the analyst determines that clarification and/or additional documents or information are necessary in order to determine compliance with eligibility requirements. Note that this is more the rule than the exception. In these cases, the analyst will send the applicant a comprehensive email listing the issues found in the documents submitted and/or the independent research SBA conducted.  The email will list the information or documents that the applicant must provide, explaining why this information/clarification is necessary to determine compliance with eligibility requirements. The analyst will provide the applicant with 5 business days to respond.  The applicant may ask for a one-time extension for no more than an additional 5 business days to provide the information. 

Does SBA assign the same analyst when the firm submits another application, after the previous one was closed?

If an application was administratively closed due to the firm’s failure to submit any documentation, the subsequent application will be assigned to the first available analyst on a first-come-first-served basis.  

If an application was closed for the firm’s failure to submit some, but not all documentation, whenever possible, SBA will assign the subsequent application to the analyst who worked on the previous application, taking into consideration workload balancing and efficient application processing. 

If the firm submits another application, after the previous one was closed, does the new application go the ‘end of the line?’

If the application was closed for the firm’s failure to submit any or all documents, the application will go the ‘end of the line.’ 

What supporting documents will I need to submit?

You will be required to submit different supporting documentation based on your ownership structure:

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Who is Considered an Employee?

How does SBA define the term "employee"?

Employee means all individuals employed on a full-time, part-time, or other basis, so long as that individual works a minimum of 40 hours per month. This includes employees obtained from a temporary employee agency, leasing concern, or through a union agreement or co-employed pursuant to a professional employer organization agreement.

SBA will consider the totality of the circumstances , including criteria used by the IRS for Federal income tax purposes and those set forth in SBA's Size Policy Statement No. 1, in determining whether individuals are employees of a concern.

Volunteers (i.e., individuals who receive deferred compensation or no compensation, including no in-kind compensation, for work performed) are not considered employees.

The definition of employee does not mention if independent contractors are considered employees. 

How do I determine if I should include or exclude an  independent contractor (i.e., a 1099 employee) from the employee pool?

It depends. SBA considers the totality of the circumstances in determining whether individuals should be excluded as employees or not. This includes, but is not limited to, the criteria in SBA's Size Policy Statement No. 1 and the direction IRS provides for Federal income tax purposes, such as the Employer’s Supplemental Tax Guide - Publication 15-A and the information in the IRS website.  SBA tends to consider individuals to be employees where it is not clear that they are independent contractors.

If I own the company applying for HUBZone certification, should I include myself when calculating the number of employees?

Yes. Additionally, any individual with an ownership interest in and who works for the HUBZone firm a minimum of 40 hours per month is considered an employee regardless of whether or not the individual receives compensation.

My firm is very small and cannot afford to pay an employee.  I pay his rent as in-kind compensation.  Can I count him as an employee?

Yes, you can count him as an employee as long as the individual works a minimum of 40 hours per month. In-kind compensation is non-monetary compensation.  SBA intended the term in-kind compensation to be read broadly and to encompass more than wages. Thus, a person who receives food, housing, or other non-monetary compensation in exchange for work performed would not be considered a volunteer.

I just hired a new employee. How soon can I apply?

You can apply at any time you believe you are eligible. However, in order to count that individual as an employee toward the principal office and 35% HUBZone residency requirement, you must be able to provide documents (e.g., payroll records), which cover the date of your application, showing that the employee worked a minimum of 40 hours in that month.

I hire seasonal employees.  Are they considered to be employees for the purpose of HUBZone certification?

For your firm to remain eligible, it must meet the eligibility criteria both “in season” and “out of season” because your seasonal employees are counted when they are working and not counted when they are not. 

There is no exception in the HUBZone regulations for seasonal employees and your firm must remain in compliance with all HUBZone regulations at all times. This means that if SBA is conducting an evaluation of the 35% requirement, you will have to provide supporting documentation that lists the employees who are working at that time, seasonal or otherwise.

How should I count an employee who is on leave at the time my firm is being reviewed for HUBZone compliance? 

Employees on temporary leave, including sick leave and maternity leave, will be counted as employees if there is evidence that the individual is being paid or will or has returned back to work and there is evidence they worked prior to the leave.  Those on indefinite leave will not be counted.

What is acceptable evidence that the employee will return to work? 

Signed statements from the employee and/or the employer with a definitive timeline for the employee’s return. 

If the leave status is with pay or without pay, does this make a difference?  Why or Why not? 

If the temporary leave is paid, then the individual conclusively counts as an employee because the individual is still listed in the payroll documents as being paid.  If the leave is unpaid, then the firm must provide evidence that the individual has previously worked at the firm and will return/has returned. 

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The Principal Office Requirement

How does SBA define the term "principal office?"

It's the location where the greatest number of employees at any one location actually perform their work, except for construction and service industries, which have exemptions based on their occasional need to assign employees at the contract location.

Is the principal office the same as the firm's headquarters?

The "principal office" does not have to be the 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.

Does a virtual office meet the principal office requirement?

The HUBZone regulations define principal office as the place where the greatest number of employees perform their work.  This means that the virtual office would be considered to be the principal office if it is the place where the greatest number of employees perform their work.

My firm operates out of a single location which is a virtual office.  What type of evidence do I need to submit to SBA to prove that the virtual office meets the HUBZone principal office requirement?
 
You’ll need to prove that your firm has a properly executed lease and it has employees working at the virtual office.
 
The ‘HUBZone Supporting Document Request’ requires that the firm submit a lease, rental agreement, or deed; a utility bill; and, a firm location list. My firm’s lease or rental agreement includes utilities, so I cannot submit a utility bill. How does my firm fulfill the requirement that it submit a utility bill?
 
SBA uses each of the referenced documents to corroborate that the firm’s HUBZone office is operational. If your firm’s lease or rental agreement includes utilizes, and for that reason, you can’t provide a utility bill, you must include a brief note to that effect in your document submission package. However, if your rental payments include utilities, but the lease or rental agreement does not explicitly so state, you must provide other evidence that utilities are included in the rent (i.e., signed affidavit from the lessor indicating utilities are included in the lease).
 
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).

I have an employee who works partially in the principal office and a secondary office.  Where do I allocate that employee?

Allocate the employee to the principal office if the person works a majority of their time there.  If employee works a majority of time in the secondary office, allocate that person to the secondary office. The secondary office could be another office of the firm (that you own and control) or a job site. Allocate employee to principal office if the person works an equal amount of time in principal and secondary office.

Example: Employee works 21 hours per month at the principal office and 19 hours per month at 2nd site (which could be a job site) à allocate employee as working at principal office.

I am the sole owner and have no other employees. I work 40 hours per month at a principal office(s) that is in a HUBZone. I am in the construction or services industry. Do I qualify as a principal office employee for the purpose of meeting the principal office requirement, regardless of the number of hours I work at the job sites?

Yes. The sole owner/employee of a business who works at least 40 hours per month at a principal office located in a HUBZone qualifies as a principal office employee, regardless of number of hours worked at job sites. This exception is limited to concerns with one person only who is both the owner and the employee.

Example 1: Sole owner/employee works 42 hours per month at a principal office (located in a HUBZone) and 83 hours per month at jobsites. The firm meets the principal office requirement.

Example 2: Sole owner/employee works 20 hours per month at the principal office (located in HUBZone), 20 hours per month at home office (located in HUBZone) and 40 hours per month at jobsites. In this situation the sole owner/employee would be counted as working at the principal office. What matters is that the sole owner/employee works 40 hours per month in the office(s).

Example 3: Sole owner/employee works 20 hours per month out of the principal office (located in a HUBZone) and spends the rest of the month working at jobsites. This firm would not meet the principal office requirement since the sole owner/employee does not spend at least 40 hours per month at the principal office.

NOTE:  The sole owner/employee is limited to one home-based office and one non-home office and both must be located in a HUBZone.  This policy only applies when the company has one employee/owner and is in the service or construction industry. As soon as the sole owner/employee hires at least one additional employee, the firm would be governed by the principal office definition in 13 CFR 126.103. SBA may consider the totality of the circumstance according to the facts of the case.

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The 35% Requirement

How does SBA define the term "reside" in reference to the employee residency requirement?

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.

My employee does not have, and cannot obtain, a driver’s license or voter’s registration card corroborating her residency in a HUBZone. What evidence can I submit to prove that she resides in a HUBZone?

The employee must submit a notarized statement declaring HUBZone residency and explaining why documentation corroborating residency in a HUBZone, such as a current driver’s license or voter registration card bearing the employee’s address in that HUBZone is unavailable. The notarized statement must cover the date of your firm’s electronic verification.
 
Sample Statement:
 
This statement serves in lieu of a driver’s license and/or voter’s registration card as one cannot be obtained due to the following circumstances: [Explain circumstances here]. I am an employee of [name of firm]. I, [person’s name], live at [home address] and have lived there since [dd/mm/yyyy]. I do consider it my permanent home. I declare under penalty of perjury, under the laws of the United States of America, that the foregoing is true and correct to the best of my knowledge.
 
__________________
[signature  and date]

What if the applicant only has supporting documents showing a PO Box with no physical address?

The individual will have to reach out to a local government office to obtain the evidence.  The filled out template below on official letterhead provided by a recognized local government entity is acceptable. This template does not need to be notarized.

Template:

[person’s name] lives at [home address] and has lived there since [dd/mm/yyyy]. I declare under penalty of perjury, under the laws of the United States of America, that the foregoing is true and correct to the best of my knowledge.

__________________

[signature  and date]

[Title]

[Local Government Entity]

What if my employee is a student residing in student housing that is in a HUBZone, but the employee’s driver’s license does not display this address?

To support the assertion that the student resides in student housing located in a HUBZone, the firm needs to provide:

1. A statement from an official or representative from the University, in letterhead, confirming the student’s residency status or a copy of an off campus housing lease showing the address to be in a HUBZone

2. The filled out, notarized template below from the employee.

This statement serves in lieu of a driver’s license and/or voter’s registration card as one cannot be obtained due to the following circumstances: [Explain circumstances here]. I am an employee of the firm [name of firm]. I, [person’s name], live at [home address] and have lived there since [ dd/mm/yyyy]. I declare under penalty of perjury, under the laws of the United States of America, that the foregoing is true and correct to the best of my knowledge.

__________________

[signature  and date]

I have employees that reside in HUBZones but are working overseas, what evidence of HUBZone residence do I submit?

Evidence to show that the employee’s residence in the United States is located in a HUBZone would include:  a properly executed lease, a valid (not expired) photo ID (such as a driver's license) that shows the HUBZone address, and/or a deed of trust. All documentation must cover the date of electronic verification. SBA may consider the totality of the circumstance according to the facts of the case.

My firm met all the eligibility criteria at the time I electronically authorized the online application, but while the application was being processed I lost 2 HUBZone employees and is now below the 35% residency requirement, what should I do? 

Withdraw the application because a firm cannot be approved if it does not meet all the eligibility criteria.  You will not need to wait 90 days to re-apply, but before re-applying you should develop a strategy on how the firm will meet the HUBZone requirements during the application process and once it becomes certified.

Is selecting employees based on residency requirement legal?  Could this open the HUBZone certified company up for hiring discrimination litigation or violate such laws?

The statute that created the HUBZone Program requires that the HUBZone firm must have a minimum 35% of its employees residing in a HUBZone.  Non-HUBZone residents are not a protected class under Federal law.  According to the EEOC, discrimination may arise when hiring decisions are made on the basis of an applicant’s “race, color, religion, sex, national origin, disability, genetic information, or age”.  See http://www.eeoc.gov/facts/qanda.html for more information. 

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Ownership and Control

Does a business on an Indian Reservation have to be Indian-owned to qualify for the HUBZone Program?

No. As long as the principal office of the business is located on an Indian reservation that is a HUBZone and meets all other eligibility criteria (e.g., ownership and control, 35% HUBZone residency requirement, etc.), it can become HUBZone certified.

I own a corporation that does not have any stock certificates or documentation issued by the company (pursuant to State law) showing ownership and control of the company.  Would this lack of documentation prevent my firm from getting its HUBZone certification?

Yes, not being able to prove the firm’s ownership and control would result in a decline. 

In general, SBA looks at stock certificates and stock ledgers to determine ownership and control because these documents will show each owner and the amount of ownership in the corporation. 

Some states, however, do not require that a corporation issue stock certificates.  In that case, SBA will look at your company’s articles of incorporation and/or by-laws.  If the articles or by-laws require that you issue stock certificates, even though the state in which your business is incorporated does not require the issuance of stock certificates, SBA will require you produce those stock certificates to demonstrate ownership and control. 

If your articles of incorporation or by-laws do not require that your company issue stock certificates, and the state in which your business is incorporated does not require the issuance of stock certificates, then you will need to check state law to determine whether your company is required to issue some other type of documentation showing ownership and control. For example, states that do not require a corporation issue stock certificates often require that the company issue each shareholder a written notice stating that the corporation is organized under the laws of the state, the name of the person to whom the shares are issued, and the number of shares owned.  State law may also set forth signature and letterhead (and other) requirements for this documentation. 

It is best to go to the Secretary of State website for the state in which you are incorporated to make sure that you have all the required documents and check your articles of incorporation and/or by-laws. 

Again, without this information, SBA is unable to verify that the applicant is directly owned and controlled at least 51% by persons who are U.S. citizens (see definition of “citizen” and “person” at 13 CFR 126.103).  Citizenship evidence is satisfied by a birth certificate or a copy of an unexpired passport. 

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Affiliates

I own other, unrelated businesses. How does that impact my application?

SBA may consider these other businesses to be affiliates. The term “affiliate” has a specific legal meaning for the SBA.  The definition is at 13 CFR 121.103. Invest the time to study “affiliation” so that you can provide the documentation necessary for your firm to obtain the HUBZone certification.  You will need to provide evidence that your firm, together with your affiliates, meets the size requirement for your primary NAICS code—which means that you must submit either business tax returns or federal unemployment tax returns for each affiliate. Details are in the supporting documentation request.

Review the HUBZone Certification Program Webinar – Part 2 where SBA explains affiliation in depth. 

To understand more about how affiliates can impact your application, make sure to review the rest of the questions in this FAQ section.

Does SBA combine employees from affiliated companies when counting employees of the applicant firm?

It depends. SBA looks closely at all relevant information and uses the totality of circumstances(see definition of employee at 13 CFR 126.103; 13 CFR 121.103(a)(5), and 13 CFR 121.106) to determine if an individual is an “employee” of the HUBZone applicant or HUBZone small business for purposes of determining whether the business meets the 35% HUBZone residency and principal office requirements.  

SBA first considers whether there is a clear line of fracture between an applicant firm and its affiliate(s). The HUBZone Certification Program Webinar – Part 2 explains affiliation in depth and the application of the totality of the circumstances test to determine if there is a clear line of fracture between the HUBZone firm and its affiliates. If it is not evident that there is a clear line of fracture, then SBA will consider the employees of the affiliate to be employees of the applicant or HUBZone small business (and vice versa).  SBA reviews all of this information to preserve the integrity of the HUBZone program and prevent certain practices that circumvent the HUBZone Act and implementing regulations.

For example, Company A is not qualified for the program. The owners of Company A set up Company B, with a few employees, most or all of whom are HUBZone residents. Company B lists a principal office location in a HUBZone and seeks HUBZone certification. Both Company A and B are in the same line of work. When Company B gets a contract, it uses Company A's employees, equipment etc. Or, it subcontracts all or most of the work to Company A. In these situations, the SBA has used the totality of circumstances to determine that the employees of Company A are actually employees of Company B (or vice versa). As a result, Company B may not meet the principal office and/or the 35% employee HUBZone residency requirement when the employees from Company A are added the to the employees from Company B.

If the two companies are sharing employees, and that’s all, then only the shared employees will be counted as employees of the applicant/HUBZone small business if they work at least 40 hours in a month for the applicant/HUBZone small business and receive compensation (unless an owner).

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Designations and the HUBZone Maps

How can I find out if my business is located in a HUBZone?

Use the HUBZone Maps to determine if your principal office is located in a HUBZone. You can search for a specific address, or enter geographic coordinates.

How can I find HUBZones in my area? I don't have a specific address in mind.

Using the HUBZone Maps, you can generate maps and tables of Qualified Census Tracts, Qualified Nonmetropolitan Counties, Qualified Indian Lands, or Qualified Base Closure Areas by state or county.

What are the different types of HUBZone designations?

A HUBZone may be one of the following:

  • A qualified Census Tract (QCT)
  • A qualified Nonmetropolitan County (QNMC)
  • A qualified Indian Reservation (QIR)
  • A Qualified Base Closure Area (QBA)
  • A Redesignated Area
  • Qualified Disaster Area

You can also watch the HUBZone mini-primer on Understanding HUBZone Designations.

How are HUBZones designated?

The SBA uses information obtained from the Department of Housing and Urban Development (HUD), the Bureau of the Census, the Bureau of Labor Statistics (BLS), the Department of Interior, Bureau of Indian Affairs and the Department of Defense. The HUBZone areas are designated by statute and draw upon determinations and information obtained by other agencies. The SBA does not have discretion when it comes to designating HUBZones. You can read more about each specific type of designation below.

What is a Qualified Census Tract (QCT)?

The US Department of Housing and Urban Development (HUD) designates Qualified Census Tracts (QCTs) for purposes of the Low-Income Housing Tax Credit (LIHTC) program. The LIHTC program is defined in Section 42 of the Internal Revenue Code of 1986. The LIHTC is a tax incentive intended to increase the availability of affordable rental housing.

The LIHTC statute provides two criteria for QCT eligibility. A census tract must have either:

  1. a poverty ra