What are MWVBEs?
In conjunction with the popular Wall Street underwriters, Goldman Sachs and JPMorgan Chase, 4 minority-owned firms joined the IPO party for the highly anticipated Robinhood public offering that occurred last month.
Ramirez & Co. and Siebert Williams Shanks were 2 of the 4 underwriters classified as MWVBEs, also pronounced as firms owned by minorities, women, or military veteran enterprises. While Wall Street and the tech industry have been predominantly male-oriented, nearly half of the biggest US tech IPOs of the past year included at least two firms in the MWVBE category.
The cloud database vendor, Snowflake, used the same four minority-owned underwriters in their recent IPO. Furthermore, Airbnb’s IPO included a dozen firms in this category.
According to the 2019 Annual Business Survey performed by the United States census bureau, there were an estimated 2.8 billion businesses owned by minorities, women, and veterans in 2018. These businesses accounted for 51.1 million jobs and about $2.6 trillion in annual payroll.
Resources Available to Minority and Women-Owned Small Businesses
Female entrepreneurs can find support through the Small Business Administration with help from the Office of Women’s Business Ownership. The OWBO connects women-owned businesses with business training, counseling, federal contract and access to credit and capital.
At Women’s Business Centers, overseen by the OWBO, advocates seek to level the playing field for female entrepreneurs who encounter distinct obstacles in the traditionally male-dominated world of business. Businesses supported by a local WBC have seen significantly higher success rates than others.
The SBA partners with several organizations that provide business training and counseling services to meet the needs of entrepreneurs and small business owners. Included in the network are SCORE mentors, Small Business Development Centers, Women’s Business Centers, and Veterans Business Opportunity Centers. Many SBA resource partners are housed in Historically Black Colleges and Universities across the nation.
The Minority Business Development Agency is operated by the US Department of Commerce and is dedicated to,
“the growth and global competitiveness of business enterprises owned and operated by African Americans, Asian Americans, Hasidic Jews, Hispanic Americans, Native Americans, and Pacific Islanders.”
Funding is available through SBA loan programs for women-owned small businesses. Additionally, there are many SBA-approved lenders who have funding options targeted at minority and underserved communities.
Tax Benefits for Minority and Women-Owned Small Businesses
Another benefit to certain small businesses owned and operated by women, minorities, or veterans is the tax exemption outlined in Section 1202 of the internal revenue code. Small businesses incorporated or taxed as domestic C-corporations who have not yet surpassed the $50 million gross asset test can be eligible for up to 100% exemption from federal capital gains tax.
This exemption can lead up to the greater of $10 million or 10x the initial investment upon the sale of qualified stock. Learn more about what kinds of businesses qualify for the exemption outlined under Section 1202.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.