{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/under-what-conditions-does-ownership-by-a-private-equity-fund-trigger-affiliation-for-sba-","api_url":"https://dealroom.so/api/public/questions/under-what-conditions-does-ownership-by-a-private-equity-fund-trigger-affiliation-for-sba-","question":"Under what conditions does ownership by a private equity fund trigger affiliation for SBA size standard purposes?","topic":"Affiliation & size","audience":"lender","bot_mode":"lender","short_answer":"A private equity fund triggers affiliation if it has the ability to control the applicant business, typically through a majority equity stake or contractual management rights. This also applies to other businesses in its portfolio.","rule":"SBA's affiliation rules apply to private equity funds (or other investment companies) when they possess the power to control a concern, even if that power is not exercised. Control can be evidenced by ownership of more than 50% of the voting equity, or through options, convertible debt, or contractual arrangements that confer control over management or board decisions. All businesses controlled by the same fund are affiliated.","example":"A private equity fund owns 60% of 'Company A' and 70% of 'Company B'. If 'Company A' applies for an SBA loan, 'Company B' would be an affiliate, and their combined revenues would be counted for size determination due to the fund's control.","what_lenders_check":"Lenders must identify all owners, including investment funds, and scrutinize their ownership percentages and control rights. This ensures accurate size standard determination by aggregating the revenues or employee counts of all affiliated businesses.","required_facts":["Fund ownership percentage","Control rights (contractual/voting)","Fund's portfolio companies","SBA size standard"],"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":"Private equity fund","url":"https://dealroom.so/glossary/private-equity-fund"},{"term":"SBA size standard","url":"https://dealroom.so/glossary/sba-size-standard"},{"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":"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/under-what-conditions-does-ownership-by-a-private-equity-fund-trigger-affiliation-for-sba-","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."]}