{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-do-potential-conflicts-of-interest-with-the-seller-like-shared-services-affect-approva","api_url":"https://dealroom.so/api/public/questions/how-do-potential-conflicts-of-interest-with-the-seller-like-shared-services-affect-approva","question":"How do potential conflicts of interest with the seller, like shared services, affect approval?","topic":"Eligibility & affiliation","audience":"borrower","bot_mode":"buyer","short_answer":"Potential conflicts of interest or shared services with the seller post-acquisition can trigger affiliation concerns, which must be carefully managed.","rule":"If the seller retains an interest, provides ongoing services, or maintains an economic dependency that could give them control or influence over the acquired business, it could trigger 'affiliation' under SBA rules. Affiliation can make the business ineligible if combined with the seller's other businesses, it exceeds SBA size standards. Any post-acquisition arrangements must be structured to avoid such affiliation, or the combined entities must meet size standards.","example":"You buy a business whose seller owns the building and proposes a long-term lease. If the lease terms or other ongoing arrangements (e.g., shared services, seller remaining on advisory board) give the seller undue influence, the lender will scrutinize this for affiliation. You may need to demonstrate the arrangements are at arm's length.","what_lenders_check":"Lenders are highly sensitive to affiliation rules, as they determine eligibility. They will meticulously review all post-acquisition agreements and relationships to ensure the buyer truly controls the business and that no prohibited affiliation exists that would jeopardize the SBA guarantee.","required_facts":["Seller retained interest","Shared services","Affiliation rules","SBA size standards","Control/influence"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 121 - Small Business Size Regulations","Affiliation and Lending Criteria for SBA Business Loan Programs - Final Rule"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 121 - Small Business Size Regulations","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-121"},{"title":"Affiliation and Lending Criteria for SBA Business Loan Programs - Final Rule","url":"https://www.federalregister.gov/documents/2023/04/10/2023-07173/affiliation-and-lending-criteria-for-the-sba-business-loan-programs"}],"related_questions":[{"question":"Can an SBA 7(a) loan be used to purchase a business that is a direct competitor of the seller?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-that-is-a-direct-competitor-of-the-sell"},{"question":"If I am buying a business from a relative, does that affect SBA 7(a) loan eligibility?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-a-business-from-a-relative-does-that-affect-sba-7-a-loan-eligibility"}],"related_terms":[{"term":"Shared Services","url":"https://dealroom.so/glossary/shared-services"},{"term":"Conflicts of interest","url":"https://dealroom.so/glossary/conflicts-of-interest"},{"term":"Identity of interest affiliation","url":"https://dealroom.so/glossary/identity-of-interest-affiliation"},{"term":"Shared Economic Interest","url":"https://dealroom.so/glossary/shared-economic-interest"},{"term":"Assignment of the Security Interest","url":"https://dealroom.so/glossary/assignment-of-the-security-interest"},{"term":"Potential Liabilities","url":"https://dealroom.so/glossary/potential-liabilities"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/how-do-potential-conflicts-of-interest-with-the-seller-like-shared-services-affect-approva","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}