{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/how-does-the-sba-define-affiliation-when-checking-business-size","api_url":"https://dealroom.so/api/public/questions/how-does-the-sba-define-affiliation-when-checking-business-size","question":"How does the SBA define 'affiliation' when checking business size?","topic":"Affiliation & Size","audience":"new","bot_mode":"buyer","short_answer":"SBA defines 'affiliation' by various factors, like ownership, management, and contractual relationships, to determine if businesses are linked and should be combined for size standard calculations.","rule":"The SBA's affiliation rules aggregate the employees and revenues of all businesses deemed 'affiliated' to ensure that only truly small businesses receive assistance. Common bases for affiliation include ownership (e.g., a single entity owning 50% or more of another), common management, common identity of interest, and contractual relationships. If affiliated businesses together exceed the size standard, the applicant business is ineligible.","example":"John owns 60% of Business A and 30% of Business B. Sarah owns 70% of Business B. John's ownership in Business B is less than 50%, but he has significant control. If the SBA determines John's businesses are affiliated due to common management or other factors, the employees and revenue of Business A and B would be combined to determine if either qualifies as 'small'.","what_lenders_check":"Lenders must identify all potential affiliates of the applicant business and its principals. They perform a thorough analysis to ensure the combined entity meets the SBA's size standards for the specific industry of the primary applicant.","required_facts":["Aggregates businesses","Ownership control","Common management","Size standard impact"],"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","SBA Table of Size Standards"],"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"},{"title":"SBA Table of Size Standards","url":"https://www.sba.gov/document/support-table-size-standards"}],"related_questions":[{"question":"When does common management or shared facilities trigger affiliation for SBA 7(a) size determination?","url":"https://dealroom.so/sba-loans/basics/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/sba-loans/basics/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/sba-loans/basics/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/sba-loans/basics/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/sba-loans/basics/what-criteria-does-the-sba-use-to-determine-common-management-that-triggers-affiliation-fo"},{"question":"How does a lender determine affiliation when a prior owner retains less than 20% equity and a consulting contract?","url":"https://dealroom.so/sba-loans/basics/how-does-a-lender-determine-affiliation-when-a-prior-owner-retains-less-than-20-equity-and"}],"related_terms":[{"term":"SBA size determination","url":"https://dealroom.so/glossary/sba-size-determination"},{"term":"SBA size standard","url":"https://dealroom.so/glossary/sba-size-standard"},{"term":"Business size standard","url":"https://dealroom.so/glossary/business-size-standard"},{"term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"},{"term":"Alienate the Business","url":"https://dealroom.so/glossary/alienate-the-business"},{"term":"Small Business Size Standards","url":"https://dealroom.so/glossary/small-business-size-standards"}],"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/sba-loans/basics/how-does-the-sba-define-affiliation-when-checking-business-size","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."]}