Navigating the Pitfalls: An MWBE Lawyer’s Guide to Avoiding MWBE Certification Denials in New York

Be sure to also read our free MWBE certification guide here, and article on Cracking the Code: Understanding the Denial and Appeal Process for WMBE Certification in NY

Obtaining certification as a Minority- or Women-Owned Business Enterprise (MWBE) can be a game-changer for eligible businesses in New York. With this certification, you gain access to a wealth of contracting opportunities across state agencies, public authorities, and public-private partnerships. However, the application process is arduous and unforgiving - even minor missteps can derail your submission and cost you valuable time and money.

In this post, we will detail some of the most frequent pitfalls that can stop an MWBE application dead in its tracks, strategies to overcome them, and why using a MWBE experienced legal team, such as Lawyer For Business, can be your greatest asset.

Incomplete Application Packages

One of the top reasons MWBE applications get denied or delayed is simply missing information or documentation. The certification unit scrutinizes every detail, so a complete, comprehensive, and consistent package is essential. Avoiding common landmines is crucial for maximizing your chances of MWBE certification success.?

Here are some of the most overlooked areas:

Ownership/Operational Control Issues

The minority and/or woman owner(s) must demonstrate full control over the company's operations and decision-making processes. This includes:

• Signing major contracts and binding agreements
• Hiring, firing, promoting, and setting compensation for key personnel
• Making strategic decisions about policies, finances, products/services, etc.
• Retaining the ability to vote on all matters without being overridden

The operating agreement, bylaws, meeting minutes, and other corporate documents must clearly establish the minority/woman owner's authority in these areas. Any provisions that dilute or constrain their control can raise red flags.

Insufficient Financial Documentation

You must prove the minority/woman owner's initial capital contributions came from their own legitimate funds, not gifts or transfers from others. Required documentation includes:

• Bank statements and other records tracing the source of funds used for the initial investment
• A comprehensive operating agreement listing each owner's capital contributions

Gaps or inconsistencies in showing where the startup capital originated can be grounds for denial.

Non-Compliance with Size Standards

The company cannot exceed the MWBE program's size standards based on revenue or employee count for its primary industry classification. These caps are regularly adjusted, so review the latest standards to ensure compliance before applying. A qualified business lawyer can review compliance requirements with you before you submit your application.

Improper Business Structure

While most business entities are eligible, certain structures are preferred over others. Corporations, LLCs, partnerships, and sole proprietorships tend to be viewed most favorably. More complex structures like joint ventures can raise questions about the minority/woman owner's control and should be avoided if possible. You should always consult with an attorney before forming your legal entity. If you have already selected a legal entity, engage a New York business attorney to review your documentation and ensure it was submitted properly to avoid revocation of status down the road.

Inadequate Demonstration of Business Experience

This is the most common issue we see in handling MWBE denial determination appeals.

The minority/woman owner's resume and background are under intense scrutiny during the certification review. A lackluster or poorly crafted resume can easily sink an otherwise qualified application.

Simply listing previous job duties and responsibilities is insufficient. The resume must convincingly highlight the owner's relevant industry-specific expertise, specialized skills, training, and qualifications that are directly applicable to the company's products, services, and operations. While you likely already have the skills necessary to craft a resume, the level of detail that must be included exceeds what you are familiar with. A seasoned MWBE attorney can help you revise your resume' to meet the standards required of the MWBE certification committee.

This includes details like:

• Formal education, certifications, training programs, etc. related to the industry
• Attendance and participation at key industry events, conferences, seminars
• Licenses relevant to the industry and key revenue-generating activities of the business
• Specific knowledge of the technical aspects of the products/services offered
• Demonstrable competence managing the core business functions

Resumes that read like a generic career history focused on previous employers rather than the owner's direct qualifications will likely be viewed as inadequate and lead to a denial.

Falsified or Exaggerated Information

The certification reviewers are extremely thorough and will fact-check every claim made in the application package. Any whiff of falsified, exaggerated, or inconsistent information is grounds for an automatic denial that can jeopardize future submissions as well.

This includes details like:

• Inflated or inaccurate ownership percentages
• Embellished roles, responsibilities, skills, or experience on resumes
• Contradictory information across documents like operating agreements, tax returns, corporate filings, etc.

Even publicly available information on the company website or the owner's social media profiles will be scrutinized. If the portrayed experience or operations don't align with the submitted application materials, it can be viewed as an attempt to misrepresent the truth. The certification unit may also conduct interviews with the minority/woman owner, other company personnel, former employers, industry contacts, and more to verify the information provided. Any inconsistencies that emerge can immediately disqualify the application. Before you prepare for interviews, you should consult with a seasoned business legal team.

Citizenship Requirements

It's a common misconception that all ethnic minorities automatically qualify for MWBE certification in New York. In reality, the program only recognizes certain designated ethnic groups as eligible. You can see the updated list here.

?For example, Iranian-Americans and other individuals of Iranian descent do not meet the criteria for minority status under the current guidelines, despite being an ethnic minority in the broader sense. Submitting an application for an ethnic group that is not on the approved list is an automatic grounds for denial that wastes valuable time and effort.

The Value of Experienced Legal Guidance

As you can see, numerous potential landmines can derail an MWBE certification application in New York, many of which are not necessarily obvious to first-time applicants. A single oversight or inconsistency in the materials can sabotage an otherwise qualified submission. This is why the vast majority of successful MWBE applicants enlist the expertise of an attorney who specializes in this certification process from the very beginning.

An experienced MWBE lawyer can provide invaluable guidance on:

• Ensuring all required documentation is properly completed, consistent, and compliant
• Structuring the business entity and ownership in the ideal manner
• Crafting compelling resumes that highlight the minority/woman owner's qualifications
• Advising on citizenship eligibility based on the latest program rules
• Advocating on the client's behalf if any issues arise during the certification review
• Requesting extensions if additional time is needed to gather materials
• Handling appeals and reapplying if the initial submission is denied

While working with an MWBE certification lawyer is an investment, it is well worth the cost compared to the potential consequences of a rejected application or compliance failures down the road that could jeopardize certification status. Based on the complexity and scrutiny involved, a comprehensive MWBE application package can easily take 40-60 hours to properly prepare on your own as a first-time applicant. An experienced attorney can streamline that process down to roughly 15-20 billable hours while maximizing the chances of approval.

The Lasting Benefits of MWBE Certification

For eligible minority- and women-owned businesses, obtaining MWBE certification opens the door to an array of lucrative opportunities across New York's local and state government agencies, public authorities, and public-private partnerships. The potential rewards make the thorough application process worthwhile.

However, cutting corners or overlooking key requirements can sabotage the entire effort and set you back months or years in lost time and missed contract opportunities. With diligent preparation, consistent documentation, and the right legal expertise, you can successfully navigate the MWBE certification process.

The lasting benefits of this credential allow certified firms to compete for a reserved portion of billions of dollars in annual contracts as New York continues its concerted efforts to support underrepresented business owners. For companies meeting the stringent criteria, MWBE status can be a game-changing competitive advantage.

About Lawyer for Business

Andrea A. Willis, Esq., is the founder of Lawyer For Business, a leading business law firm with offices in New York and Florida. With extensive experience in business law, Andrea and her team specialize in providing tailored legal solutions for entrepreneurs, e-commerce sellers, and businesses of all sizes. From contracts and intellectual property to business formation and compliance, Lawyer For Business is dedicated to empowering clients to achieve their goals while navigating legal complexities. For personalized legal advice or to learn more about our services, visit lawyerforbusiness.com or contact us at (716) 745-6225.

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This blog post is for informational purposes only and does not constitute legal advice. For specific legal concerns, please consult with a qualified attorney.

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