What is a Section 3 Business?

A Section 3 business refers to a specific type of enterprise that is recognized under Section 3 of the Housing and Urban Development Act of 1968. This particular designation is aimed at fostering economic opportunities for low-income individuals and businesses that are owned by or employ such individuals. Understanding the intricacies of what constitutes a Section 3 business is crucial for those looking to benefit from government contracts and assistance programs.

What is a Section 3 business? A Section 3 business is defined as a business that meets one of the following criteria: it is at least 51% owned by low-income residents; it employs low-income individuals for at least 30% of its full-time, permanent staff; or it provides evidence of a commitment to subcontract over 25% of the dollar award of all subcontracts to businesses that meet the first two criteria. These businesses are eligible for certain preferences in bidding for contracts and other economic opportunities provided by the Department of Housing and Urban Development (HUD).

Criteria for Section 3 Business Certification

To qualify as a Section 3 business, a company must meet specific criteria set forth by HUD. Firstly, the business must be at least 51% owned by Section 3 residents, who are defined as public housing residents or individuals who earn less than 80% of the median income for the area. Secondly, the business must have at least 30% of its permanent, full-time staff comprised of Section 3 residents. Lastly, the business can also qualify if it commits to subcontracting at least 25% of the dollar value of all subcontracts to Section 3 businesses that meet the first two criteria.

Benefits of Being a Section 3 Business

Being recognized as a Section 3 business comes with several benefits. One of the primary advantages is the preference given in bidding for HUD-funded contracts. This can significantly increase a business’s opportunities for securing government projects. Additionally, Section 3 businesses can access various forms of support and resources aimed at helping them grow and succeed. This includes training programs, technical assistance, and networking opportunities with other Section 3 businesses and contractors.

HUD’s Section 3 program aims to ensure that economic opportunities generated by certain HUD financial assistance are, to the greatest extent feasible, directed toward low- and very low-income persons, particularly those who are recipients of government assistance for housing. This initiative not only helps in the upliftment of disadvantaged communities but also promotes the growth of small businesses that are integral to the local economy.

Overall, understanding and qualifying as a Section 3 business can open up numerous opportunities for growth and development, especially for businesses that are committed to employing low-income individuals and contributing to their communities. The benefits extend beyond just financial gains, fostering a sense of community and shared purpose among businesses and residents alike.

What is a Qualified Trade or Business Under Section 199A? Section 199A of the Internal Revenue Code was introduced as a part of the Tax Cuts and Jobs Act of 2017. This section allows eligible taxpayers to deduct up to 20% of their qualified business income (QBI) from a qualified trade or business. The provision aims to provide tax relief…
What is a Section 162 trade or business? Understanding the concept of a Section 162 trade or business is crucial for individuals and entities engaged in various commercial activities. Section 162 of the Internal Revenue Code (IRC) pertains to the ordinary and necessary expenses incurred in carrying out a trade or business. This section is fundamental in determining…
How do Section 179 deductions aid small businesses? Small businesses often face numerous financial challenges, from managing operational costs to investing in new equipment and technology. One way that the U.S. tax code helps alleviate some of these financial burdens is through Section 179 deductions. This provision allows businesses to deduct the full purchase price of qualifying equipment…
How to Get a Business Loan to Purchase a Business? Acquiring a business can be a significant investment, and securing the necessary funds is often a crucial step in the process. Business loans are a common solution for entrepreneurs looking to purchase an existing business. Understanding the steps involved and the requirements for obtaining a business loan can help streamline…
How Can I Cash a Business Check Without a Business Account? Cashing a business check without a business account can be a challenging task. Many banks and financial institutions have stringent policies regarding the cashing of checks, especially those issued to businesses. However, there are still several options available for individuals or business owners needing to convert a business check into…