Hub Zone

The HUBZone Program from the U.S. Small Business Administration (SBA) helps promote job growth, capital investment, and economic development to historically underutilized business zones, referred to as HUBZones, by providing contracting assistance to small businesses located in these economically distressed communities. 


The Most-Frequently Asked Questions Regarding HUBZone Certification

How does a firm qualify for this program?
To qualify for the program, a business (with the exception of tribally-owned concerns) must meet the following criteria:

  • It must be a small business by SBA standards;
  • It must be at least 51% owned and controlled by U.S. citizens, or a Community Development Corporation, or an agricultural cooperative, or an Indian tribe;
  • Its principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act; and
  • At least 35% of its employees must reside in a HUBZone.

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

If I own the company applying for HUBZone certification, should I include myself when calculating the number of employees?
Yes. You count regardless of whether you serve in a paid or unpaid status, so long as you consider yourself to be a principal employee of the firm and spend full-time equivalent hours devoted to the business.

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.

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.

 

Note:

Although service and construction industry firms may exclude employees that are working at job sites (when determining principal office only), this waiver does not pardon those firms from having to meet the statutory requirement of having a Principal Office in a HUBZone.  All HUBZone firms must have a Principal Office that at least one or more employees perform the greatest amount of their work, regardless of the firm’s industry.  Therefore, at a minimum, at least one employee must perform the greatest amount of their work at that HUBZone office location.  Also note that regardless of the firm’s industry, each firm must include all employees in the 35% residency calculation.


Example 1

A firm has an office located in a HUBZone with three employees working at that location, and it also has a contract site where 75 employees work. The firm would only count the three employees that work at the office when determining its Principal Office. However, the firm would include all 78 employees when calculating the 35% residency requirement. In this example, the firm meets the Principal Office requirements because the greatest number of employees (three, excluding the 75 employees at jobsites) perform their work at the HUBZone location.

Example 2

A firm has an office located in a HUBZone, but all employees, including the owner/proprietor, work at jobsite locations fulfilling contractual obligations.  In addition, no administrative tasks such as writing proposals, generating payroll, etc., are performed by the owner/proprietor at the HUBZone office location. In this example, the firm would not meet the Principal Office requirement because the firm does not have any employees performing their work at the HUBZone location.

Example 3

A firm has an office located in a HUBZone and the owner/proprietor and the staff (nine, including the owner/proprietor) perform work at jobsites fulfilling specific contract obligations.  However, the owner/proprietor also conducts administrative tasks such as writing proposals, generating payroll, responding to emails, etc,. while in the office.  SBA will consider the time spent performing administrative work in the office as performance of the greatest amount of work by the owner/proprietor.  Therefore, the firm would have one employee that performs the greatest amount of work in that office.  In this example, the firm would meet the Principal Office requirement because the administrative work performed in the office would be considered when determining Principal Office.


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.

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 certify as, a “Principal Office” for HUBZone certification (assuming all other eligibility requirements are similarly maintained).

Does a business that attempts to qualify for the HUBZone Program based upon its location on an Indian reservation have to be Indian-owned?
No. As long as the principal office of the business is located on an Indian reservation and meets all other eligibility criteria, it can earn the HUBZone designation.

How do I apply for HUBZone certification?
The HUBZone application is an electronic application. Use this “HUBZone Program Office Supporting Documentation Request” to get started.

Whom do I contact if I have questions about the application?
The HUBZone Help Desk, via telephone at (202) 205-8885 or via email to hubzone@sba.gov.

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