Section 3 Certification Businesses Qualification

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Three Ways for Your Business to Qualify

Your business can qualify for Section 3 Certification in three ways: by ownership, employees, or subcontracting. 

1. Qualify by Ownership

Businesses are eligible for Section 3 Certification if they are owned 51% or more by Section 3-Certified individuals.

If you intend to qualify as a Section 3 Individual-Owned Business, then you are required to demonstrate your individual Section 3 eligibility and present additional information about your business structure.

Personal Documentation

  • Individual Section 3 Self-Certification: You will need to provide proof of your individual Section 3 Certification. If you currently live in public housing or meet the income limits, you may be eligible.

Business Documentation

  • Articles of Incorporation: If your business is a corporation, you must provide Official Articles of Incorporation. These must be signed by all corporate officers and the relevant state official. If you are registered as an Alabama corporation, you can find a copy of your articles of incorporation on the Alabama Secretary of State website. If you are having trouble locating the document, contact your local Public Housing Authority.
  • Partnership Agreement: If you are involved in a contractual arrangement with another business for a specific project or undertaking, then you may be in a joint venture. These must be signed by all corporate officers and the relevant state official. You must provide original and any amended Partnership or Joint Venture agreements.
  • Shareholders Agreement: If your business has multiple owners with shares, you must include your shareholders agreement, which is a legal document that describes how the company will operate and details the individual rights of shareholders You must provide original and any amended Partnership or Joint Venture agreements. It also outlines the obligations of shareholders and their role in the company. This must include a list of owners or stockholders with percentage ownership.
  • Organization Chart Including Names and Titles: You must provide an organization chart for your business. This should include a list of all company officers, their names, and titles. You must also list all of your permanent, full-time employees and their job titles. You should indicate If these individuals are residents of public housing or receive public assistance.

2. Qualify by Employees

If your employees are residents of public housing, receive public assistance, or meet the income requirements, they may be eligible for Section 3 Resident Status. If 30% of your permanent, full-time employees are Section 3 eligible or have been over the past three years, you may be eligible to be a Section 3 Business concern.

Documentation to Provide

  • List of all permanent full-time employees: You will need to provide a list of all the employees at your firm. You must provide names, job titles, and dates of employment. In addition, you must provide copies of certifications or other relevant professional credentials. Within this list, you must indicate which employees are section 3 certified, residents of public housing, or receive public assistance.
  • Documentation of employees Section 3 Status: For each employee claiming Section 3 status, you will need to provide documentation of their certification.

3. Qualify by Subcontracting

Businesses are eligible if they subcontract at least 25% of a HUD-funded project to Section 3 Certified businesses.

Documentation to Provide

  • Subcontracting Plan: You will need to provide a subcontracting plan that lists the specific Section 3-Certified business or businesses you will partner with along with the specific contract amount you intend to subcontract to each of those businesses. The amount subcontracted to Section 3 Certified businesses must be at least 25% of your total bid amount.
  • Documentation of Section 3 Certification for Each Applicable Business: You must provide the Section 3 Business Certification for each subcontractor. Contact the subcontractor and request a copy of their certificate.