{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/how-does-common-management-trigger-affiliation-for-size-standard-purposes","api_url":"https://dealroom.so/api/public/questions/how-does-common-management-trigger-affiliation-for-size-standard-purposes","question":"How does common management trigger affiliation for size standard purposes?","topic":"Affiliation & Size","audience":"lender","bot_mode":"lender","short_answer":"Businesses are affiliated if they share common management, meaning one or more individuals control the day-to-day operations of both entities, regardless of ownership percentage.","rule":"Affiliation based on common management occurs when the same individual(s) manage or have the power to manage the operations of two or more entities. This can be through management agreements, common officers, or directors, even if there's no direct ownership link. This rule prevents businesses from structuring operations to circumvent size standards.","example":"John Doe is the CEO of Company A (the applicant) and also the sole general partner responsible for day-to-day operations of Company B, a separate legal entity. Even if John owns less than 50% of Company B, Company A and Company B are affiliated due to common management.","what_lenders_check":"Lenders must conduct thorough due diligence on all owners, officers, and key managers to identify other businesses they manage or control. Incomplete information can lead to an incorrect size determination and an ineligible loan.","required_facts":[],"source_families":["13 CFR Part 121 - Small Business Size Regulations","Affiliation and Lending Criteria for SBA Business Loan Programs - Final Rule","SBA Table of Size Standards"],"official_sources":[{"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"},{"title":"SBA Table of Size Standards","url":"https://www.sba.gov/document/support-table-size-standards"}],"related_questions":[{"question":"How does the SBA define 'affiliation' when checking business size?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-define-affiliation-when-checking-business-size"},{"question":"When does common management or shared facilities trigger affiliation for SBA 7(a) size determination?","url":"https://dealroom.so/for-lenders/questions/when-does-common-management-or-shared-facilities-trigger-affiliation-for-sba-7-a-size-dete"},{"question":"What factors are considered when evaluating affiliation between businesses that share common management?","url":"https://dealroom.so/for-lenders/questions/what-factors-are-considered-when-evaluating-affiliation-between-businesses-that-share-comm"},{"question":"What are the financial criteria for a business to qualify as 'small' under the alternative size standard?","url":"https://dealroom.so/for-lenders/questions/what-are-the-financial-criteria-for-a-business-to-qualify-as-small-under-the-alternative-s"},{"question":"Does an unfunded stock option agreement trigger affiliation for SBA 7(a) size standard calculations?","url":"https://dealroom.so/for-lenders/questions/does-an-unfunded-stock-option-agreement-trigger-affiliation-for-sba-7-a-size-standard-calc"},{"question":"What criteria does the SBA use to determine common management that triggers affiliation for size standard purposes?","url":"https://dealroom.so/for-lenders/questions/what-criteria-does-the-sba-use-to-determine-common-management-that-triggers-affiliation-fo"}],"related_terms":[{"term":"Common management","url":"https://dealroom.so/glossary/common-management"},{"term":"Size standard","url":"https://dealroom.so/glossary/size-standard"},{"term":"Business size standard","url":"https://dealroom.so/glossary/business-size-standard"},{"term":"Size standard compliance","url":"https://dealroom.so/glossary/size-standard-compliance"},{"term":"SBA size standard","url":"https://dealroom.so/glossary/sba-size-standard"},{"term":"Alternative size standard","url":"https://dealroom.so/glossary/alternative-size-standard"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/how-does-common-management-trigger-affiliation-for-size-standard-purposes","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."]}