Anchin’s Regulatory Compliance and Investigations (RCI) Team assists Socially and Economically Disadvantaged Individual (SEDI) owned businesses, as well as their lenders and investors, navigate the SEDI compliance requirements under federal and state programs, including the State Small Business Credit Initiative (SSBCI).
Our experienced professionals provide clear and practical guidance to ensure eligibility, manage self-certification, and implement documentation processes designed to withstand regulatory scrutiny.
What is a SEDI owned business?
SEDI owned businesses play a critical role in expanding access to capital and promoting economic equity. Under applicable federal and state guidance, a business may qualify as SEDI-owned if it is owned and controlled by individuals whose access to credit on reasonable terms has been diminished compared to others in similar economic circumstances.
A business may qualify as SEDI-owned based on factors that include, but are not limited to:
- Membership in a group subjected to racial or ethnic prejudice or cultural bias
- Gender
- Veteran status
- Limited English proficiency
- Disability
To qualify as SEDI‑owned, a business must meet the following specific ownership and control thresholds designed to ensure that qualifying individuals have both meaningful equity ownership and decision‑making authority within the organization.
- Privately held businesses: At least 51% owned by qualifying individuals
- Public companies: At least 51% of voting stock owned by qualifying individuals
- Mutual institutions: Majority of board, account holders, and served community must be predominantly qualifying individuals
Unlike some other ownership designations, SEDI status does not require a formal certification process and is generally established through self‑certification in connection with financing or credit applications.
Services Provided to SEDI Businesses
Anchin works closely with SEDI‑owned businesses to provide comprehensive services that help ensure compliance, including assisting with:
- Interpreting SEDI eligibility criteria and regulatory guidance
- Advising on proper self-certification disclosures
- Reviewing supporting documentation for accuracy
- Identifying compliance risks related to ownership, control, or operational location
- Supporting lenders and investors with program-level compliance reviews
The RCI team also helps clients establish internal controls, policies, and procedures that promote compliance, transparency, and defensibility in the event of regulatory review.
Relevant Experience
Rochester Schools Modernization Program
A city school district enacted a $1.4 billion bonded construction school modernization program, where some schools in the district would be renovated, and new schools would be constructed. As part of the state and local funding, the program is required to adhere to SEDI business utilization guidelines and local workforce requirements. The Anchin team has been appointed as the Independent Compliance Officer for this project to implement procedures and monitor the project’s performance.
New York State Department of Health: Wynn Hospital
A large municipality enacted a $500 million construction project, that included a $300 million state-issued grant, for a new medical campus and hospital in Utica, NY. The New York State Department of Health maintains strict policy requirements and goals to ensure funding is granted appropriately. Our team was engaged to develop and implement a compliance plan to successfully meet/exceed SEDI utilization goals, analyze local workforce requirements, and verify compliance with all funding sources. While this project required $90 million in SEDI participation, we successfully implemented a plan and procedures to achieve $108 million in SEDI utilization.
The scopes of work for the Rochester and Wynn Hospital engagements listed above include Anchin performing the following services:
- Developing and implementing procedures to enhance SEDI participation and drive compliance with program requirements.
- Verifying SEDI certification status, scope of work, applicable commodity codes, capacity, and bonding limits.
- Working with bidders to further break down scope packages and identify opportunities for additional SEDI participation to qualified, competent potential partners.
- Implementing commercial-useful function testing to mitigate the risk of fraud, waste, and abuse of SEDI firms. Anchin’s procedures include payment application review with corresponding proof of payment (i.e., copies of canceled checks), bills of lading, purchase orders, comparing certified payroll report records with proposed scope of services, and site visits.
- Monitoring and reviewing documentation to verify worker demographics, residency, wages paid, trade classification, etc. in accordance with program’s local workforce requirements.
New Stadium Construction
A professional sports franchise began the $2.2 billion bonded construction of a new stadium in New York. The funding required the municipality to meet certain SEDI requirements, both in awarding contracts and in the prime contractor’s hiring of employees. Our team was engaged to analyze the first $1.2 billion in construction costs to develop a plan to successfully meet all SEDI requirements. Upon our engagement, the project was projecting total SEDI participation to be 4%. At the completion of our contract, we successfully increased the projected SEDI participation to 40%, surpassing the required 30% goal. To achieve this result, the Anchin team:
- Developed and implemented procedures to enhance SEDI participation and drive compliance with program requirements.
- Organized and conducted numerous outreach sessions to educate and drive awareness of the project amongst the SEDI community. These sessions were designed to inform eligible firms of the upcoming work and allow networking opportunities with approved prime bidders.
- Worked with state and local officials to streamline the certification process for eligible firms awaiting certification approval, mitigating the risk of missed opportunities for SEDI firms.
- Developed and implemented good faith efforts tracking systems in accordance with New York State law and expectations to successfully track all efforts to utilize SEDI participation and document the local opportunities provided by this project while protecting our clients from potential shortfall penalties.
- Verified SEDI certification status, scope of work, applicable commodity codes, capacity, and bonding limits.
Confidential
A municipality enacted the $614 million bonded construction of clean rooms to manufacture chips on the campus of a SUNY school in Upstate NY. The Anchin team was engaged to conduct a compliance study and review of SEDI participation for the project. The team was able to conduct a study of the project’s location, the capacity of SEDI certified (or eligible) firms, other major ongoing projects and requirements, and construction schedules to recommend applicable SEDI goals. We were also able to develop illustrative tools to present our findings to the project owners, state officials, and local representatives. Services provided include the:
- Development and implementation of SEDI analysis procedures, which are proven to strategically recommend participation goals that are based on current data and analysis. Anchin’s transformative approach to analyzing these types of projects to develop diversity plans is foundational for success.
- Review of the project’s budget and estimated construction package costs. This allowed our team to assign applicable commodity codes to analyze all eligible SEDI firms for each package to understand the capacity.
- Identification of equipment and scopes of service that are limited in SEDI opportunities to present to ownership, state, and local officials in preparation for potential waivers in calculations.
- Implementation of procedures to mitigate the risk of shortfalls for contractors and increase SEDI participation, when applicable.
Connect with Anchin’s Regulatory Compliance and Investigations Team to learn how we can support your organization with SEDI eligibility, certification, and ongoing compliance requirements.
Learn more about our RCI team below.
