According to the Questions and Answers on the SBA's Website, the Following are the Qualifications for the HUBZone Empowerment Program
Eligibility
To qualify for the program, a business (except tribally-owned concerns) must meet the following criteria:
- It must be a small business by SBA standards;
- It must owned and controlled at least 51% 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.
Existing businesses that choose to move to qualified areas are eligible. To fulfill the requirement that 35% of a HUBZone firm's employees reside in the 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.
How does SBA define the term "reside" in reference to the 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. Notice that the "principal office" definition can mean something very different from a 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 are certified as a "principal office" for HUBZone certification (assuming all other eligibility requirements are similarly maintained)
Does this program only apply to small businesses that are currently located in HUBZones, or can firms move to these areas and then become eligible to participate?
This program applies to firms that are currently located within HUBZones and can include any start-up business that chooses to start operation in a HUBZone. An existing small business that chooses to relocate to a HUBZone can also become certified provided it meets the remaining criteria outlined earlier.
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.
- A qualified census tract.� The definition for Qualified Census Tract is based on an Internal Revenue Service provision for the low income housing tax credit program that is developed in conjunction with the U.S. Department of Housing and Urban Development (HUD).� The Secretary of HUD designates Qualified Census Tracts by a notice published periodically in the Federal Register.� The most recent notice based on the results of the 2000 census data collection appeared December 12, 2002, and were represented on the HUBZone mapping system on May 19, 2003.
- A difficult development area. The definition of Difficult Development Area is similar to Qualified Census Tract in that it is based on an Internal Revenue Service provision for the low income housing tax credit program that is developed in conjunction with the U.S. Department of Housing and Urban Development (HUD). (NOTE: By virtue of legislation signed into law on Aug. 10, 2005, the application of the Difficult Development Area status for HUBZone consideration only applies to Alaska, Hawaii, and the U.S. territories and possessions, not the 48 contiguous states.) The Secretary of HUD designates Difficult Development Areas by a notice published periodically in the Federal Register. The most recent notice appeared August 22, 2005.
- A qualified county. The definition for qualified county is any county that, based on the most recent data available from the U.S. Census Bureau, is not located in a metropolitan statistical area and in which the median household income is less than 80 percent of the median household income for the entire non-metropolitan area of a state and/or any non-metropolitan county that, based on the most recent data available from the Bureau of Labor Statistics (BLS), has an unemployment rate that is not less than 140 percent of the state average unemployment rate or the national average unemployment rate.
- A qualified Indian reservation. The definitions for qualified Indian reservations, which include lands covered by the phrase "Indian Country," are those established and used by the Bureau of Indian Affairs. There is one exception, which applies to portions of the state of Oklahoma where HUBZone is using a definition arrived at by the Internal Revenue Service.
- A former military base closed by the Base Realignment and Closure Act (BRAC). Congress determined that former military bases closed because of BRAC qualify for HUBZone status for a five-year period from the date of formal closure. For those locations closed as of the date the legislation was signed into law, the five-year period began on the date the law became effective, Dec. 8, 2004.
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