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Why Being a Family Business May Prevent DBE Certification

Friday, April 9, 2021 Many small businesses begin as or grow into a “family business” where multiple members of the same family own or play important roles in the company.  A small business where individuals that are considered socially and economically disadvantaged own at least 51% of the business and control the management and daily business operations of the business may qualify for Disadvantaged Business Enterprise (DBE) certification.  However, your family business may face additional scrutiny if it applies for DBE certification. If a socially and economically disadvantaged individual owns and controls a company, their immediate family members (who are not socially and economically disadvantaged) are not precluded from participating in the company for DBE purposes.  Under the regulations, 49 C.F.R. § 26.71(k), those family members can be managers, employees or even owners.

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