• It must be a small business by SBA size standards;
• Its principal office must be located within a HUBZone, which includes lands on federally recognized Indian reservations;
• It must be owned and controlled by one or more U.S. citizens (N.B.-this means any level of ownership in an applicant small business by another company would result in a decline). Approved ownership can also be by a Community Development Corporation or Indian tribe; and
• At least 35% of its employees must reside in a HUBZone.

• This makes clear that the HUBZone program does not apply to contracts awarded by state and local governments, since the HUBZone Act only applies to the federal government.

• The amended rule says that for concerns whose primary industry is services or construction (i.e., other than manufacturing), the principal office would be the location where the greatest number of the concern's employees perform their work, but excluding those employees who perform their work at job-site locations to fulfill specific contract obligations.

• Before the amendment, regulations permitted a qualified HUBZone SBC to have affiliates only if those affiliates are qualified HUBZone SBCs, participants in the 8(a) Business Development Program, or woman-owned businesses (WOBs). But this was all seen as overly restrictive.
• Accordingly, SBA eliminated these restrictions on affiliation and allows a qualified HUBZone SBC to have affiliates as long as it, when combined with its affiliates, is still small pursuant to SBA's size regulations.
• In addition, the removal allows SBCs in non-HUBZone areas to establish new business ventures in HUBZones. This is especially critical due to the historical lack of investment capital in HUBZones and the need for such capital to establish new businesses that will promote economic development and create jobs.

• SBA amended the provisions concerning non-manufacturers.
• Under the amended rule, non-manufacturer HUBZone concerns no longer are required to demonstrate that they can provide product or products manufactured by qualified HUBZone SBCs.
• SBA now allows a qualified HUBZone SBC to use any manufacturer, including a large business, for HUBZone contracts at or below $25,000 in total value. This provision encourages the participation of small business non-manufacturers that are located in HUBZones.
• Contracts above $25,000 will still require that the HUBZone non-manufacturer provide the product of a HUBZone manufacturer.

A9. Generally speaking, there are two levels of benefit. The first relates directly to Federal contracts, while the second involves specialized assistance.

There are four types of HUBZone contract opportunities:

• only one qualified HUBZone SBC is responsible to perform the contract,
• two or more qualified HUBZone SBCs are not likely to submit offers and
• the anticipated award price of the proposed contract, including options, will not exceed:

• Eligible HUBZone firms can qualify for higher SBA-guaranteed surety bonds on construction and service contract bids.
• Firms in Federal Empowerment Zones and Enterprise Communities (EZ/EC) can also benefit from employer tax credits, tax-free facility bonds, and investment tax deductions.

A16. There are three HUBZone categories -- Urban, Rural and Native American:-

1. Urban = Metropolitan Area Census Tracts (HUD) - 7,000 total in U.S.
2. Rural = Non-metropolitan Counties – 900 total in U.S.

* Rural designation results when median household income is less than 80% of the non-metropolitan state level (Census)

* Rural designation can also occur when analysis shows an unemployment rate that is not less than 140% of the state-wide average (BLS)

3. Native American = All federally recognized Indian reservations as defined by external boundary – exceeds 340 total in U.S. and lands covered by phrase "Indian Country".

Rural reflects employment and income adjustments (employment levels determined annually).

Native American involves Federal recognition and boundary changes (no fixed time).