Lawmakers have been searching for answers to bolster a small business program designed to focus on economically disadvantaged communities, and vendors are saying their most recent effort goes a long way toward solving some of its biggest problems.
The Small Business Administration’s Historically Underutilized Business Zone (HUBZone) program incentivizes small businesses to base their headquarters in and hire employees from communities with high unemployment and low median incomes. The government has never reached its goal of awarding 3 percent of its contracts to HUBZone-certified businesses. SBA reports it came closest within the last decade in 2009 with 2.81 percent, but that number has steadily dropped to a low of 1.67 percent in 2016.
“Program participation dropped immensely after the release of the 2010 Census data,” said House Small Business Committee Ranking Member Nydia Velazquez (D-N.Y.) during a Sept. 13 hearing on the HUBZone Unification and Business Stability Act of 2017. “Nearly 90 percent of HUBZones do not have a single certified firm.”
One of the main reasons behind this is the way HUBZone qualification data is calculated. The income and unemployment numbers used to designate HUBZones are updated annually, causing the zones to shift on a yearly basis. This makes it difficult for businesses seeking HUBZone certification to conduct long-term planning in order to locate their headquarters and hire employees in such a way that will maintain compliance.