Veteran Owned Small Business Certification

August 30, 2023

by a searcher from University of Pennsylvania - The Wharton School in Minneapolis, MN, USA

Question for veteran SMB owners or those knowledgeable on the topic: Does the veteran individual need to have 51% ownership of the operating company? Put another way, can an operating company wholly-owned by a HoldCo with 51% veteran ownership qualify for a VOSB/SDVOSB?

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Reply by a searcher
from University of Ottawa in Ottawa, ON, Canada

The requirements for obtaining certification as a Veteran-Owned Small Business (VOSB) or Service-Disabled Veteran-Owned Small Business (SDVOSB) can vary by country and the specific regulations in place at the time. However, I can offer some general information that may be helpful. In the United States, a company typically needs to have at least 51% ownership by one or more veterans and at least one veteran must control and manage the business operations in order to qualify as a VOSB or SDVOSB. This means that the veteran(s) would generally need to own at least 51% of the operating company to meet the certification requirements. If a Holding Company (HoldCo) owns the operating company and the HoldCo has 51% veteran ownership, it may not automatically qualify for VOSB/SDVOSB certification. Certification requirements often specify that the ownership and control must be directly present within the operating company seeking certification. The HoldCo structure could potentially complicate the certification process. However, keep in mind that certification rules and regulations can change over time. It is advisable to consult with a legal professional or business advisor who is knowledgeable about the most current regulations for VOSB/SDVOSB certification. They can provide the most accurate and up-to-date information based on the current laws and regulations. Additionally, government agencies such as the U.S. Small Business Administration (SBA) offer resources and guidance to assist veterans in navigating the certification process for their small businesses.

Reply by a searcher
from American Military University in Michigan, USA

From what I know about the SDVOSB process it's owned by the SBA, not a state agency nor another federal agency (VA, etc.). One thing to think about for anyone going down this path is obviously a set aside (SDVOSB, WOSB, etc.) can be helpful to scale revenues but if your goal is to exit eventually then being cognizant of the amount of revenue booked under your certification would be a prudent move (if you try to sell in a number of years you'll really need to find someone with a minority certification so it'll greatly reduce your potential buyer pool). Just food for thought.

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