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​The Small Business Blog

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Is your business eligible for the HUBZone program?

6/27/2017

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The Historically Underutilized Business Zone or HUBZone program was created in 1997 to encourage economic development in HUBZones, which are areas that typically have low median household incomes and/or high unemployment.
 
In order to participate in the HUBZone program and take advantage of the program benefits (please visit our blog here to read about the program benefits), a company needs to meet a number of eligibility criteria, including:​
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  • Must be small according to SBA’s size standards;
  • Principal office must be located in a HUBZone;
  • 35% of employees must live in a HUBZone; and,
  • Must be a majority owned and controlled by a U.S. citizen, Community Development Corporation (CDC), agricultural cooperative, or Indian tribe/Alaska Native Corporation (ANC)/Native Hawaiian Organization (NHO).
Must be Small
 
In general, a business is “small” if it is independently owned and operated and is not dominant in its field of operations.  To be eligible for small business programs and preferences, a business must also meet numerical standards established by the SBA.  To determine if your business is small and meets SBA’s standard, please visit out blog post here.
 
Principal Office Must be Located in a Designated HUBZones
 
According to 13 C.F.R. 126.103, a principal office is the location where a majority of a business’ employees perform their work.  For businesses in the service or construction industries, the determination of principal office will not include employees who perform a majority of their work at job-sites for specific contract obligations. 
 
After determining where a majority of your employees operate out of (also known as your principal office), use SBA’s HUBZone map tool, to determine if your principal office is located in a designated HUBZone.  Please note that these maps are updated as data is updated, so it’s important that you monitor designated HUBZones to ensure continued program eligibility.
 
35% of Employees Must Live in a HUBZone
 
To determine HUBZone eligibility, SBA counts all individuals employed on a full-time, part-time, or other basis, as long as that individual works a minimum of 40 hours per month.  Employees from a staffing or leasing agency, or through union agreements are also counted.  To be eligible, 35% of all of these employees must live in a HUBZone.  Please refer to  13 C.F.R. 126.103 for the specific definition of employee.
 
As noted above, for each employee you must use SBA’s HUBZone map tool to determine if he/she lives in a designated HUBZone.  SBA will require proof, including employee IDs and HUBZone maps, for each employee who lives in a HUBZone.
 
Owned and Controlled by a U.S. Citizen
 
As with other small business programs, to be eligible for the HUBZone program, a firm must be owned and controlled by a U.S. Citizen.  Businesses owned by CDCs, agricultural cooperatives, or Indian tribes/ANCs/NHOs are also eligible.
 

If you meet all of these requirements, we encourage you to further explore the benefits of the program and determine if it could be useful for you.  There is a formal application process to participate in the HUBZone program.  Please visit our blog here to get more information about this application process.
 
Please contact us at (808) 369-9710 or via e-mail at info@holomuaconsulting.com to find out how we can help you with exploring the HUBZone program.
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