Minority-owned business certification in Texas is a formal designation that helps small businesses compete for government contracts and private sector opportunities that set aside work for historically disadvantaged groups.
In Texas, there are three primary certification bodies: the Texas Comptroller's Historically Underutilized Business (HUB) program (state-level), the federal Small Business Administration's 8(a) program (national), and third-party certifiers like the National Minority Supplier Development Council (NMSDC) and its regional affiliate, the South Central Texas Regional Certification Agency (SCTRCA).
This article focuses primarily on Texas HUB certification, explaining eligibility requirements, application steps, documentation, benefits, renewal, and the difference between HUB and SBA 8(a).
What is Texas HUB certification?
The Texas Historically Underutilized Business (HUB) program is administered by the Texas Comptroller of Public Accounts.
Its purpose is to promote full and equal business opportunities for all businesses in state procurement.
A HUB-certified business is eligible for bid preferences and set-aside contracts with Texas state agencies (including the Texas Department of Transportation, Texas Education Agency, and the Health and Human Services Commission).
The state has a goal of awarding 21% of its contracting dollars to HUBs.
While federal law prohibits strict quotas, Texas agencies must make a "good faith effort" to include HUBs, and many contracts give a price evaluation advantage (e.g., 5% to 10%) to HUB bidders.
HUB certification is free and lasts for four years.
Eligibility requirements for Texas HUB certification
To qualify as a HUB, a business must meet all of the following criteria:
- Minority ownership: At least 51% of the business must be owned and controlled by one or more persons who are members of a recognized minority group. Recognized groups include: Black Americans (African American), Hispanic Americans, Native Americans (including Alaskan Natives and Native Hawaiians), Asian Pacific Americans, and women (for the Women-Owned HUB category, which is separate but often processed together). Note: Women are considered a HUB category, so a business owned 51% by women qualifies as a Woman-Owned HUB.
- Control: The minority owner(s) must have day-to-day control over the business operations and strategic decisions. They must hold the highest officer positions (President, CEO, etc.) and have authority to sign contracts, hire and fire employees, and manage finances. Passive investors or figureheads do not qualify.
- Citizenship: The minority owners must be U.S. citizens or legal permanent residents (green card holders).
- Net worth limitation (for some programs): For the personal net worth test, the Comptroller does not impose a strict cap for general HUB certification, but for federal 8(a) program, there is a $750,000 net worth limit (excluding primary residence and retirement accounts). Texas HUB only requires that the business is a small business under Texas Government Code Chapter 2161, which generally means fewer than 100 employees or less than $6 million in annual revenue for most services, or $10 million for manufacturing.
- Principal place of business: The business must have its principal place of business in Texas or must be a Texas resident business (if a sole proprietorship).
- Good standing: The business must be registered with the Texas Secretary of State (if an LLC or corporation), have a valid Texas Sales Tax Permit (if selling taxable items), and not have any outstanding tax debts or delinquent filings with the Comptroller.
Step-by-step application process for Texas HUB certification
Step 1: Register your business with the Texas Comptroller
Before applying for HUB certification, your business must already be registered with the Texas Comptroller for franchise tax and sales tax (if applicable).
You will need your 11-digit Texas Taxpayer ID number. If you have not yet registered, complete the online registration through WebFile (this also registers you for a Sales Tax Permit).
Step 2: Gather required documentation
The Comptroller requires extensive documentation to prove ownership and control. Prepare the following:
- Personal identification for each minority owner: driver's license or state ID, Social Security card, and proof of citizenship (birth certificate, passport, or naturalization certificate). For permanent residents, provide green card.
- Business formation documents: Certificate of Formation (from SOS), Operating Agreement (for LLCs), Bylaws (for corporations), partnership agreement (for partnerships).
- Proof of ownership: Stock certificates (for corporations), capital contribution records, or membership unit ledgers showing the minority owner's 51%+ interest.
- Resumes of minority owners demonstrating their qualifications and management roles.
- Organizational chart showing the chain of command and decision-making authority.
- Bank signature cards showing which individuals have authority to sign checks.
- Lease agreement for business premises or proof of ownership.
- Last three years of federal tax returns (or a statement if less than three years in operation).
- List of all current contracts and clients (sample).
Step 3: Complete the HUB application form (Comptroller Form 01-916)
Download Form 01-916 (Application for Historically Underutilized Business Certification) from the Comptroller's website.
The form asks for: business legal name, DBA (if any), mailing address, physical address, contact information, Texas Taxpayer ID, number of employees, annual revenue range, primary NAICS codes, and ownership details (name, ethnicity, percentage ownership, title, and proof of citizenship for each minority owner).
You must also answer questions about potential conflicts of interest and disclose any prior criminal convictions of owners.
Sign the form under penalty of perjury.
Step 4: Submit the application online or by mail
The Comptroller accepts HUB applications electronically through the Texas HUB Portal (hubs.texas.gov). Create an account, upload all supporting documents as PDFs, and submit.
Alternatively, mail the paper application and copies of documents (not originals) to: Texas Comptroller of Public Accounts, HUB Certification Program, P.O.
Box 13128, Austin, TX 78711-3128. There is no filing fee.
Processing time typically takes 45 to 90 days, depending on the completeness of your application and the volume of applications.
Step 5: Site visit and interview (if requested)
The Comptroller may conduct a site visit to your business location to verify that the minority owners are actively involved in daily operations.
During the visit, an analyst will tour your facility, review your books and records, and interview the minority owners.
They may ask to see board meeting minutes, payroll records, and contracts. If you work from a home office, be prepared to show that the home office is your primary business location.
If the site visit reveals that the minority owners do not have substantive control (e.g., a non-minority manager is making all decisions), the application will be denied.
Step 6: Receive certification decision
If approved, you will receive a HUB certificate (PDF) and your business will be listed in the Comptroller's online HUB directory.
State agencies and prime contractors can search this directory to find HUB vendors.
If denied, you will receive a written explanation of the deficiency. You can appeal the denial within 30 days by submitting a written request for reconsideration with additional evidence.
Benefits of Texas HUB certification
- HUB preference points: Many state solicitations give price evaluation advantages (e.g., a 5% to 10% reduction in bid price for evaluation purposes) to certified HUBs.
- Set-aside contracts: Certain contracts (especially those under $100,000) may be restricted to HUBs only.
- Mentor-Protégé program: The Comptroller's HUB Mentor-Protégé Program pairs experienced HUBs with large prime contractors for training and networking.
- Access to HUB directory: Large prime contractors looking to meet HUB subcontracting goals will search the directory and reach out to you.
- Free certification: Unlike private certifiers (which charge fees), Texas HUB certification costs nothing.
Difference between Texas HUB and SBA 8(a) certification
The SBA 8(a) Business Development program is a federal program for socially and economically disadvantaged businesses.
It offers sole-source contracts up to $4 million for goods/services and $7 million for manufacturing.
To qualify for 8(a), the business must be 51% owned by a U.S. citizen who is socially disadvantaged (subjected to racial or ethnic prejudice) and economically disadvantaged (personal net worth below $750,000).
The application process is far more rigorous, requiring a narrative of disadvantage and often taking 6-12 months.
Texas HUB certification does not automatically qualify you for 8(a), and vice versa.
However, many businesses pursue both: HUB for state contracts, 8(a) for federal contracts.
Renewal and maintenance
Texas HUB certification is valid for four years from the date of approval.
Approximately 90 days before expiration, the Comptroller will send a renewal notice. To renew, submit an updated application and current documentation.
Failure to renew results in removal from the HUB directory. Additionally, you must update your HUB certification within 30 days of any material change: change in ownership, change in control (e.g., new CEO), change in business address, or change in minority ownership percentage below 51%.
Failure to report changes can lead to decertification and penalties for misrepresentation.
Pro tip: Do not confuse HUB certification with the federal Disadvantaged Business Enterprise (DBE) program.
DBE is specific to transportation-related contracts (FAA, DOT, FTA) and has different rules.
If your business seeks contracts with the Texas Department of Transportation (TxDOT), you may need both HUB and DBE certification.
Contact TxDOT's Civil Rights Division for dual application guidance.