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Understanding Minority Owned Businesses: Definition and Importance
Definition & Meaning
Minority-owned businesses are enterprises where 51 percent or more of the ownership is held by individuals from minority groups. These groups typically include African-Americans, Hispanics, Asians, and Native Americans. Over the past two decades, there has been a notable increase in the number of minority-owned businesses in the United States, driven by economic growth, improved access to education and capital, and community support.
Table of content
Legal Use & context
The term "minority-owned business" is often used in legal contexts related to procurement, affirmative action, and business certifications. It plays a significant role in various legal areas, including:
Contract law: Many government contracts require a percentage of work to be awarded to minority-owned businesses.
Business law: Minority-owned businesses may seek certification to access specific funding opportunities and resources.
Civil rights law: Legal protections exist to prevent discrimination against minority business owners.
Users can manage aspects of establishing or operating a minority-owned business using legal templates and forms available through US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A Hispanic entrepreneur starts a catering business, owning 100% of the company. This business qualifies as a minority-owned business.
Example 2: An African-American couple opens a retail store where they hold 51% of the shares. They can apply for minority business certifications to access government contracts. (hypothetical example)
State-by-state differences
State
Certification Process
Additional Support Programs
California
State certification required for government contracts.
Offers various grants and loans for minority businesses.
New York
Certification through the Minority and Women-Owned Business Enterprises (MWBE) program.
Access to state contracts and funding opportunities.
Texas
Certification available through the Historically Underutilized Business (HUB) program.
Support through local chambers of commerce.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Women-Owned Businesses
Businesses where at least 51% is owned by women.
Focuses specifically on gender rather than ethnicity.
Small Business
Any independently owned business with a limited number of employees and revenue.
Does not necessarily include minority ownership criteria.
Common misunderstandings
What to do if this term applies to you
If you believe your business qualifies as a minority-owned business, consider the following steps:
Gather documentation to prove ownership and control.
Research certification programs relevant to your state or industry.
Explore funding opportunities and resources available for minority-owned businesses through local chambers of commerce or the U.S. Small Business Administration.
Consider using US Legal Forms to access templates for necessary legal documents.
If your situation is complex, consulting a legal professional may be beneficial.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
Ownership requirement: 51% or more by minority individuals.
Common industries: Retail, health care, construction.
Access to government contracts can be available through certification.
Key takeaways
Frequently asked questions
A minority-owned business is one where at least 51% of the ownership is held by individuals from recognized minority groups.
You can apply for certification through state or local government programs, as well as organizations that specialize in minority business support.
Resources include local chambers of commerce, the U.S. Small Business Administration, and various grant programs aimed at supporting minority entrepreneurs.