Calculating Personal Net Worth for Disadvantaged Business Enterprises (DBEs) and Airport Concession Disadvantaged Business Enterprises (ACDBEs)

The United States Department of Transportation (DOT) recently issued an Interim Final Rule (IFR) that removes race- and gender-based presumptions of social and economic disadvantages in DBE and ACDBE programs.

One manifestation of this major change is the requirement for DBEs and ACDBEs to include a personal net worth (PNW) statement (as well as other financial information the applicant considers relevant) to demonstrate disadvantage.

Understanding Personal Net Worth

PNW is the total of all your assets, less your liabilities, measured at a point in time.

Common assets include:

• Cash
• Investments
• Real estate
• Vehicles
• Personal property
• Business ownership

Liabilities may include:

• Mortgages
• Student loans
• Car loans
• Credit card balances

How to Calculate PNW to Demonstrate Disadvantage

For DBE/ACDBE purposes, the calculation of PNW excludes the following:

1. An individual’s ownership interest in the applicant or participating DBE or ACBDE firm
2. The value of an individual’s primary residence
3. The value of retirement accounts

If an individual owns multiple DBEs, the value of the ownership interest in the entity that is not being certified must be included in the PNW.

DOT Example of PNW Calculation for DBE/ACDBE Purposes

Disadvantaged Owner A operates a trucking company, #1, and a landscape company, #2. Both companies are certified DBEs. The ownership interest in company #1 is excluded when Owner A’s PNW is calculated with respect to company #1, but the ownership interest in company #2 is not excluded. Likewise, the ownership interest in company #2 is excluded when Owner A’s PNW is calculated with respect to company #2, but the ownership interest in company #1 is not excluded.

The DOT sets a personal net worth cap. As of May 9, 2024, it is $2,047,000. It is expected to be revised in May 2027.

Get Your Business Recertified as a DBE, ACDBE, or MWBE

The construction, engineering, and architecture industries are among the most impacted by this change. You will need to submit for recertification as a DBE/ACDBE or a Minority and/or Women-Owned Business Enterprise (MWBE). Be sure to properly calculate your PNW so recertification goes smoothly. If you need assistance, please reach out.