How to Get Certified as a Service-Disabled Veteran-Owned Business and Why It's a Good Idea
Veterans love to start businesses. They love it so much, in fact, that they make up 5.5% of all business owners in the United States and are 45% more likely to start one than a non-veteran.
But a lot of veteran business owners could be leaving money on the table without ever knowing it.
Some of them just don’t know that their service (and subsequent VA disability rating) can give a business a competitive edge worth millions of dollars in federal contracts: The Service-Disabled Veteran-Owned Small Business program, or SDVOSB.
The chief problem here is that veterans tend to see things labeled "service disabled" and immediately assume it's not meant for them. Perhaps they don't consider themselves disabled enough. Or—more likely—they don't have a disability rating at all (no joke, a lot of veterans never get one until they need medical help and it's their last option). Some might even have decided the paperwork wasn't worth the trouble.
But they would be wrong.
The federal government is required by law to direct at least 5% of all federal contracting dollars to certified SDVOSBs. That goal applies to prime contract and subcontract dollars alike. We're talking tens of billions of dollars in contract opportunities every year, set aside specifically for people who served and suffered a disability along the way.
America would prefer that you don’t get disabled during your service, but if you did, they also want to take care of you, and that’s what SDVOSB and VSOB is for.
SDVOSB and VOSB
The SBA has two classifications of offically vet-owned businesses that might be confusing when acronyms are involved (and acronyms are always involved). Veteran-Owned Small Business (VOSB) and Service-Disabled Veteran-Owned Small Business (SDVOSB) both require that veterans own and control at least 51% of the business.
The difference comes when a disability is taken into account.
To qualify as an SDVOSB, at least one of those veteran owners must have a service-connected disability rating from the VA. The rating doesn't have to be high: even a 0% rating, where the VA acknowledges a service connection but didn't assess any compensation, qualifies. All they need is formal recognition that there's a service-connected disability involved in the ownership there.
VOSB certification is good, but SDVOSB is better because it carries more contracting weight, and contracting equals contracting dollars. SDVOSBs can compete for both sole-source contracts and set-aside competitions that are available only to SDVOSB-certified firms. VOSBs without service-connected disability have a narrower set of VA-specific opportunities. Across the federal government, SDVOSB status opens the best doors.
This is a lot of capital letter acronyms, but it’s also a lot of government, and potentially an awful lot of money.
Qualifying as a SDVOSB
Like everything in the VA system, this designation starts with filing the paperwork to get a disability rating. The veteran must own at least 51% of the business, and have control of the firm. this means they hold the highest officer position, they’re the one making long-term strategic decisions, and aren't subject to the whims of investors, board members, or other owners that would override control. They are the undisputed HMFIC of this business.
The business itself must also qualify as a small business under the SBA's size standards, which vary by industry and are based on either annual revenue or number of employees depending on your NAICS code.
If you don’t know what things like HMFIC, NAICS, or SBA are, it’s time to get smart. Once you have those TLAs down, check the SBA's size standards tool before applying to confirm your business is within the threshold for your business category.
The government even acknowledges that life happens and makes plans for the disability getting worse or the death of a veteran. Two separate provisions protect family-run businesses built around a veteran's service. If the veteran owner had a 100% service-connected disability rating or died as a result of a service-connected disability, a surviving spouse can hold the certification for up to 10 years, a window that closes early on remarriage or if they just give up ownership.
When a veteran has a permanent and severe service-connected disability, a designated permanent caregiver can exercise control of the firm on the veteran's behalf. That’s a a rule that can only be in place while the veteran is alive, and cannot be used in perpetuity, otherwise it would be a backdoor for civilians to use this benefit, and also just one more potential motive for murder.
The Certification Process, Step by Step
The SBA runs applications through a certification portal at certifications.sba.gov. You'll need an account there as well as a current, active registration in SAM.gov, the System for Award Management, which is the federal government's contractor database. Contracting officers simply can't do business with firms that aren't active in SAM, so if your registration is expired it’s time to renew.
Once you're in the portal, it’s time for more paperwork. You'll need to verify veteran status with a DD-214, and a VA award letter confirming your disability rating. The business itself needs supporting documentation to prove that it is, in fact, a business and does actually exist. If that sounds absurd, look up what civilians did with the paycheck protection program during COVID and realize the government does this for a reason.
Papers that prove you’re a business include articles of incorporation or organization, operating agreements or bylaws, the full list of officers and directors, any existing stock certificates or ownership agreements, and financial statements. If your business has licensing requirements relevant to its industry, those go in too.
Once submitted, the SBA's Director of Government Contracting reviews the application. If it needs clarification, they'll issue a request for additional information (RFAI), and you'll have time to respond. If you’re denied, there’s an appeals process (there’s always an appeals process).
Once certified, you’re a valid SDVOSB for three years, and then you'll need to recertify. All you have to do in between is notify the SBA within 30 days if any material change occurs. This includes things like that might affect eligibility, like ownership shifts, changes to the company's size, or if the veteran dies (and if you’re the veteran who died, no worries; that’s someone else’s problem now).
What SDVOSB Certification Gets You
The most direct benefit is access to federal contracting opportunities that competitors without SDVOSB status can't bid on. The VA has an obligation under the Veterans First Contracting Program to give priority to VOSB and SDVOSB firms before opening competitions to the broader market.
That means your certified firm gets a first look at contract opportunities that might otherwise go to much larger companies. Take that, Boeing.
Sole-source awards are the most direct version of this advantage. A contracting officer can award a contract directly to a certified SDVOSB without competitive bidding, provided the contract value is below the sole-source threshold (currently $4 million for most contracts, $7 million for manufacturing contracts) and a responsible SDVOSB firm is available at a fair and reasonable price.
That's money awarded on the basis of your certification and your price, without anyone else even in the running.
Then there are et-aside competitions. The contracting officer restricts the competition to SDVOSB-certified firms only, which still reduces the competitive field. ISo it’s not an instant win, but instead of going up against every firm in the country, you're competing only against other certified SDVOSBs.
Beyond federal prime contracting, certification helps in two other ways. Large federal prime contractors (DoD in particular) have small business subcontracting plans that include SDVOSB goals. Being certified makes your firm a more attractive partner for those primes, who need certified SDVOSB firms to meet their own reporting obligations.
And at the state level, roughly a dozen states have parallel veteran-owned business programs with their own preference mechanisms. Virginia, Texas, California, and others have state certification systems.
Common Application Mistakes
It turns out, not everyone makes the cut. The SBA denies a lot of SDVOSB applications, and there are a few consistent themes as to why.
The biggest one is proving unconditional control. The veteran owner has to run the company, not just hold majority equity. The SBA will make sure this is the case, and it reads the fine print in all your documents. So review your company documents before you apply and fix anything that restricts it, ideally with an attorney who understands federal small business certification. Restructuring after your application won’t cut it and you’ll have to reapply.
Incomplete documentation is the other big one. The ownership percentages in your operating agreement need to match what you report in the application. The veteran's name on the DD-214 needs to match the name on the business documents. The VA award letter needs to show the service-connected disability, not just the overall rating. Small discrepancies create delays and RFAIs; significant ones trigger denials.
Get Going
If you want guidance before you apply, there are plenty of well-qualified consulting firms who specialized in getting SDVOSB certification and will help you get there (for a price). Veterans Business Outreach Centers (VBOCs) are SBA-funded, and offer similar support with a broader entrepreneurship focus.
If your company is already structured correctly and you have your documentation ready, the application itself is easy and can be done in an afternoon if your file organization isn’t pure chaos. For most veterans with straightforward ownership structures, a day spent gathering documents is worth the investment.
