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Certification Application Rejected?

Rejection can be quite frustrating, especially when you’ve spent hours filling out forms and locating supporting documents. Here are some things that can cause a certifier to reject your application for diversity certification, in no particular order…

Missing paperwork: There’s a checklist for a reason.  If a document is on the checklist, either provide a copy or an explanation for why you are not – even if it’s a simple “not applicable”.

Incorrect Paperwork: Proving diverse Ownership, Control, Operational Authority or Governance of the certified business includes having up-to-date, legitimate and correct documents.

Remember, to qualify for United States certifications the business MUST be owned and controlled by a person or persons (U.S. citizens or permanent residents) who meet the definitions for the certification you want to obtain.

Ownership:

  • Minority Business Enterprise (MBE) 51% ethnic or racial minority ownership.  Some agencies permit Caucasian or white women to qualify as MBEs.
  • Women Business Enterprise (WBE) 51% women ownership, regardless of ethnic or racial origin.
  • Veteran Business Enterprise (VBE) 51% United States veteran ownership – honorably discharged – regardless of ethnic or racial origins.
  • Service Disabled Veteran Business Enterprise (SDVBE) 51% United States veteran ownership – service related disabled and honorably discharged – regardless of ethnic or racial origins.
  • Person with Disability Business Enterprise (PDBE) 51% ownership by disabled persons, regardless of ethnic or racial origins.
  • Lesbian, Gay, Bisexual or Transgendered Business Enterprise (LGBTBE) 51% ownership, regardless of ethnic or racial origins.

Control: This means the proven ability of the diverse owner(s) to make independent and unilateral decisions required to lead the business in the future. The diverse owners must possess the power or make or affect daily and future management of the business.

Authority: This means the diverse owner’s participation in daily operations and differs based on the company’s industry.  The diverse owners must possess the knowledge and experience to run the business or clearly demonstrate how s/he can cover any deficiencies without impacting ownership or control. Proof of knowledge is often demonstrated by a resume, education or professional licenses and certifications.

Operational Management: This means the diverse owners must be capable and possess the power to direct, or cause the direction, of the daily management and policies of the business. S/he must make major decisions about the ongoing direction, management, policy and operation of the business. There can not be any formal or informal inhibitions or restrictions on the diverse owners discretion related to operating the business.

No agreement should ever prevent the diverse owners from exercising control of their business.

Partnerships: Make sure all partnership, revenue sharing and control agreements reflect the correct distributions. Don’t make the mistake of agreements that say you and your partners will share all income and risk equally. Diverse owners, or other members of the disadvantaged group, must hold the highest officer position (e.g. Managing Partner or Chief Executive).

Corporations: Make sure at least 51% of the stock is owned and voted by members of the disadvantaged group. No shareholder voting agreement can eliminate or influence the beneficial ownership, rights or control of the disadvantaged owners seeking certification. Membership in the Board of Directors should be similar to the owner percentages or shareholders should make sure to set limits on the Board’s ability to supersede the owners’ choices. Diverse owners, or other members of the disadvantaged group, must hold the highest officer position (e.g. Chief Executive Officer) and the office must be described in the corporate by-laws.

Limited Liability Companies: Make sure all managing, revenue sharing and control agreements reflect the correct distributions. The diverse owners, or other members of the disadvantaged group, must hold the highest officer position (e.g. Managing Director or Chief Executive Officer).

As Marian wrote on August 24th, not being registered to do business can be a reason for rejection. “If you want to get certified in another state other than your home-state you should find out whether they require your business to be licensed or registered to do business as part of the certification process.”