The Illinois Business Enterprise Program is designed to award a large percent of state business opportunities to enterprises with owners who are members of a minority group (MBE), females (FBE), veterans (VBE), or disabled individuals.
In order to qualify, an enterprise must be “owned and controlled” by one or more persons in one of the disadvantaged classes. It also must be “certified” by the State or by another qualified agency.
In the course of each year, millions of dollars in business is awarded through the program to Illinois-based companies. These awards are given through contracts to provide goods and services to the state and to other participating agencies and municipalities.
Who offers the Illinois Business Enterprise program?
The program is offered by the State of Illinois, the Illinois Toll Highway Authority, the City of Chicago, the Chicago Public Schools, the County of Cook, and many other governmental agencies and municipalities throughout the state.
There are private businesses that offer similar opportunities through programs of their own design. One example is the Illinois Utilities Business Diversity Council supported by ComEd, Peoples Gas, and other Illinois-based utility companies.
How do I certify my business in a defined class?
A business enterprise seeking certification in one of the defined classes must submit a comprehensive application with supporting documents with the required information about the business and its owners that demonstrates that it meets the “owned and controlled” test.
The application should be submitted to the Illinois Department of Central Management Services. The application form may be downloaded from their website.
Other agencies qualified to provide certification are listed below:
- Chicago Minority Business Development Council
- Women’s Business Development Center
- Illinois Unified Certification Program
- City of Chicago
- Chicago Transportation Authority (CTA)
- Cook County
Where can I find out more about MBE certification?
Contact the Illinois Department of Central Management Services at 1-800-356-9206 or any of the certifying agencies for help.
There are also seminars and workshops on the Business Enterprise Program sponsored from time to time by community colleges in various locations.
In addition to these public resources, there are private attorneys and counselors who can help navigate the program on payment of a fee. You probably don’t need this help with the large number of certifying agencies that help small business owners for free.
How should our MBE company be set up?
A business looking for certification may be set up as a sole proprietorship, a partnership, a corporation, a nonprofit organization, or a limited liability company (LLC). For further information on which of these businesses entities may be best for you, see Starting your own small business and Creating a nonprofit organization .
When putting together the required forms, distributing shares of capital stock or LLC membership units, and electing a board of directors and officers, remember that the enterprise must be “owned and controlled” by one or more members of the designated class.
What is meant by owned and controlled?
The minority, female, veteran or disabled owners must own 51% or more of the company seeking certification and also control the company’s business affairs. That means 51% or more of the capital stock or LLC membership units and voting control of the entity.
For example: If a husband and wife are each involved with the enterprise seeking certification, the wife must own 51% or more of the company and must be able to outvote her husband.
Many applications for certification are denied because the applicant can’t convince the certifying agency that the disadvantaged partner is actually in control of the business, even if the applicant can produce stock certificates or a partnership agreement showing that the female or minority member owns the required 51%. Many certified enterprises have had their certifications revoked when government auditors stop by the place of business unannounced and find a white male sitting in the corner office with his partner nowhere to be seen.
There is a risk of criminal proceeding as well as the removal of certification when the auditors discover a misrepresentation on the application. Therefore, you should take the application seriously.
What records should we maintain?
Keep all records showing that the minority, female, veteran or disabled individual involved in the business owns 51% or more of the company and holds the most senior position among its officers and directors.
For example: If the applicant is a corporation certified as a female-owned enterprise, the articles of Incorporation and annual report to the Secretary of State should list the female member as the corporation’s president and registered agent. To be on the safe side, the minutes of board meetings should show that the female member presided at meetings. The corporation should also contain a resolution authorizing the female member to sign checks on the company’s bank account.
On a day to day basis, there are further steps that can be taken. The female business owner should sign contracts and other important documents as “Helen Smith, President.” If the company participates at trade shows, the female member should be able to show through current records that she was in attendance at the show and served as hostess at the company’s reception for customers and other industry members. Having her personally present at bid openings and important meetings with the customer would also be helpful.
A nice office or desk location, and a sign on the desk identifying the occupant as “Helen Smith, President” would also be a good idea.
If the company certified as a disadvantaged business is working as a contractor or subcontractor on a construction project, it would be a good thing for the female or minority owner to visit the site from time to time.
In other words, the individual whose race, gender, or other characteristics upon which the company bases its application should act just like the top person in the company whenever it is natural and convenient to do so. They should also preserve appropriate records to prove this in case a question is ever raised.