{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-determine-affiliation-between-two-businesses-if-they-share-common-managem","api_url":"https://dealroom.so/api/public/questions/how-does-the-sba-determine-affiliation-between-two-businesses-if-they-share-common-managem","question":"How does the SBA determine affiliation between two businesses if they share common management but no common ownership?","topic":"Affiliation & size","audience":"lender","bot_mode":"lender","short_answer":"The SBA may determine affiliation based on common management if one or more individuals or entities control the management of both businesses, even without a direct ownership stake.","rule":"Affiliation can be established through several tests, including common management. If an individual or group of persons has the power to control, or actually controls, the management or daily business operations of two or more concerns, these concerns are considered affiliates. This can include common officers, directors, or key employees who manage both entities.","example":"A CEO of Business A (applicant) also serves as a managing partner for Business B, and the lender's due diligence reveals Business B is financially intertwined or provides critical services to Business A. Even without common ownership, the common CEO's control of management can trigger affiliation, requiring a combined size analysis.","what_lenders_check":"Lenders must thoroughly investigate management structures, operating agreements, and any shared resources or contractual relationships between businesses, especially if there's overlap in key personnel. Documenting the lack or existence of control is crucial for an accurate size determination.","required_facts":["Common management","No common ownership","Control of operations","Key personnel","Affiliation rules"],"source_families":["13 CFR Part 121 - Small Business Size Regulations","SOP 50 10 - Lender and Development Company Loan Programs","Affiliation and Lending Criteria for SBA Business Loan Programs - Final Rule"],"official_sources":[{"title":"13 CFR Part 121 - Small Business Size Regulations","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-121"},{"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":"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":"When does a contractual relationship between two businesses trigger affiliation for size standard calculations?","url":"https://dealroom.so/for-lenders/questions/when-does-a-contractual-relationship-between-two-businesses-trigger-affiliation-for-size-s"},{"question":"How does ownership of options or warrants affect affiliation determination for SBA size standards?","url":"https://dealroom.so/for-lenders/questions/how-does-ownership-of-options-or-warrants-affect-affiliation-determination-for-sba-size-st"},{"question":"What are the size standard requirements for a business applying for a 7(a) loan if it operates internationally?","url":"https://dealroom.so/for-lenders/questions/what-are-the-size-standard-requirements-for-a-business-applying-for-a-7-a-loan-if-it-opera"},{"question":"What specific scenarios involving shared directors, officers, or key employees constitute 'common management' triggering affiliation for SBA size determination?","url":"https://dealroom.so/for-lenders/questions/what-specific-scenarios-involving-shared-directors-officers-or-key-employees-constitute-co"},{"question":"Under what conditions does a shared economic interest trigger affiliation for SBA size standard purposes?","url":"https://dealroom.so/for-lenders/questions/under-what-conditions-does-a-shared-economic-interest-trigger-affiliation-for-sba-size-sta"},{"question":"How does the 'totality of the circumstances' rule apply when determining affiliation for SBA size standards?","url":"https://dealroom.so/for-lenders/questions/how-does-the-totality-of-the-circumstances-rule-apply-when-determining-affiliation-for-sba"}],"related_terms":[{"term":"Common management","url":"https://dealroom.so/glossary/common-management"},{"term":"Affiliated businesses","url":"https://dealroom.so/glossary/affiliated-businesses"},{"term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"},{"term":"Ownership Share","url":"https://dealroom.so/glossary/ownership-share"},{"term":"Common officer","url":"https://dealroom.so/glossary/common-officer"},{"term":"Common Ownership","url":"https://dealroom.so/glossary/common-ownership"}],"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-the-sba-determine-affiliation-between-two-businesses-if-they-share-common-managem","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."]}