How do I get my business certified as a VOSB or SDVOSB through SBA VetCert?

What VetCert is and why it exists

The Veteran Small Business Certification program, known as VetCert, is SBA’s certification for veteran-owned small businesses (VOSBs) and service-disabled veteran-owned small businesses (SDVOSBs). SBA states that the National Defense Authorization Act for Fiscal Year 2021 transferred the certification function from the Department of Veterans Affairs to SBA as of January 1, 2023, and the program rules are published in Title 13, Part 128 of the Code of Federal Regulations.

SBA describes the benefits this way: certification allows SDVOSBs to compete for sole-source and set-aside contracts across the federal government, and certified VOSBs may compete for sole-source and set-aside contracts from VA. SBA also notes that the federal government aims to award at least 5% of all federal contracting dollars to SDVOSBs each year. Certification is required for these set-asides; federal rules ended the ability to self-certify for SDVOSB set-aside and sole-source contracts for firms that had not applied by December 31, 2023.

Step 1: Confirm the business is ready

VetCert certifies an existing business, not an idea. Before you apply, the business should be formed, have its governing documents in order, and be registered in SAM.gov, the federal System for Award Management. SBA’s eligibility list includes being small under the size standard for any NAICS code listed in the business’s SAM profile, so choose your NAICS codes carefully and check them against SBA’s size standards.

• Formed entity with current state filings, such as a Texas LLC or corporation in good standing.
• Active SAM.gov registration with accurate NAICS codes and a Unique Entity ID.
• Veteran status that VA can confirm, and for SDVOSB, a VA service-connected disability rating.
• Governing documents that match how the business actually operates.

Step 2: Check ownership against SBA’s rules

Under 13 CFR 128.202, one or more veterans must unconditionally and directly own at least 51% of the business. For SDVOSB, the 51% owners must be service-disabled veterans. Direct ownership means the veteran owns the interest personally, not through another company or trust, although SBA treats a revocable living trust as direct ownership when qualifying veterans are its grantors, trustees, and current beneficiaries.

Unconditional means the ownership is not subject to arrangements that could shift its benefits to someone else, such as voting trusts or executory agreements. Ordinary commercial arrangements, such as pledging stock as loan collateral or a normal right of first refusal, do not by themselves break unconditional ownership. SBA also treats unexercised stock options or conversion rights held by non-veterans as if they were exercised, which can unexpectedly push veteran ownership below 51%.

Step 3: Check control, where many applications fail

Under 13 CFR 128.203, control means one or more qualifying veterans control both long-term decision-making and day-to-day operations. A qualifying veteran must hold the highest officer position, usually President or CEO, and have managerial experience of the extent and complexity needed to run the business. The veteran does not need to hold every technical license if they have ultimate managerial and supervisory control over the people who do.

Structure matters. In an LLC, qualifying veterans must serve as managing members with control over all decisions. In a partnership, they must be general partners. In a corporation, they must control the board of directors, and supermajority voting provisions in bylaws or articles can defeat control if the veterans do not hold enough votes to overcome them.

• Non-veteran partners can be involved, but they cannot actually control the business or have the power to block the veteran’s decisions.
• A non-veteran’s pay should not exceed that of the veteran in the top officer position unless it is commercially reasonable or the veteran chose lower pay to benefit the business.
• The controlling veteran generally must devote full time to the business during normal operating hours. Outside employment that prevents that can defeat control, and new outside employment after certification must be reported to SBA.
• Heavy dependence on a non-veteran for financing, bonding, a critical license, or most of the revenue can raise control concerns.

Step 4: Gather documents and apply

Apply through SBA’s certification portal. SBA states that the portal provides checklists and pre-application guides, an eligibility check, and the online application, and that you can use it to search for certified VOSBs and SDVOSBs. Use the current SBA checklist for your business structure rather than a third-party list, because required documents differ for sole proprietorships, partnerships, LLCs, and corporations.

Expect to provide documents that prove ownership and control, such as formation documents, operating agreements or bylaws, ownership or stock ledgers, records showing who holds officer positions, and information about outside employment and key relationships. Make sure the documents agree with each other and with your SAM.gov profile. Under federal rules, the applicant has the burden of proof, and SBA may ask for clarification or additional documents, so respond promptly and completely.

Step 5: After a decision

If approved, your certification appears in SBA’s certification records, and federal buyers can search for your firm. Update your capability statement and marketing to reflect the exact status granted: VOSB or SDVOSB, certified by SBA.

If declined, read the reasons carefully. Under 13 CFR 128.305, a declined business may apply again after 90 calendar days if it believes it has overcome the reasons for the decline. Many declines involve control issues that can be fixed by amending governing documents or changing roles, which is a good conversation to have with an APEX Accelerator counselor or an attorney.

Staying certified

Under 13 CFR 128.306, certified firms must recertify every three years and may begin up to 90 days before the eligibility period ends. A firm that misses the deadline is decertified, but SBA will reinstate it if it recertifies within 30 days after the period ends.

Under 13 CFR 128.307, a certified firm must notify SBA within 30 calendar days of any material change that could affect eligibility, such as a change in ownership, business structure, or control, or a bankruptcy filing. Put the recertification date and these reporting duties on your compliance calendar the day you are approved.

Frequently asked questions