{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-thresholds-or-rules-for-determining-affiliation-based-on-common-mana","api_url":"https://dealroom.so/api/public/questions/what-are-the-specific-thresholds-or-rules-for-determining-affiliation-based-on-common-mana","question":"What are the specific thresholds or rules for determining affiliation based on common management, beyond direct ownership?","topic":"Affiliation & Size","audience":"lender","bot_mode":"lender","short_answer":"Affiliation through common management occurs when individuals, firms, or entities direct or have the power to direct the management of two or more businesses, even without majority ownership.","rule":"The SBA's affiliation rules extend beyond direct ownership to include common management. If the same individual or group of individuals manages the day-to-day operations or has the power to make key policy decisions for multiple businesses, those businesses are considered affiliated for size standard purposes.","example":"A lender is underwriting a $1M 7(a) loan for 'Biz A'. The owner of 'Biz A' also serves as the CEO of 'Biz B', a separate legal entity, and makes all strategic decisions for both. Despite no ownership overlap, the common management structure triggers affiliation, requiring the lender to combine the revenues of 'Biz A' and 'Biz B' to determine size eligibility.","what_lenders_check":"Lenders must thoroughly investigate management structures, board memberships, and operational control across all related entities. Failure to identify common management affiliation can lead to an incorrect size determination and subsequent guaranty denial.","required_facts":["Common management","Power to direct","Strategic decisions","Size standard determination"],"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":"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":"Call on the guaranty","url":"https://dealroom.so/glossary/call-on-the-guaranty"},{"term":"Direct Loan","url":"https://dealroom.so/glossary/direct-loan"},{"term":"Direct Lender","url":"https://dealroom.so/glossary/direct-lender"},{"term":"ERISA Rules","url":"https://dealroom.so/glossary/erisa-rules"},{"term":"Affiliation","url":"https://dealroom.so/glossary/affiliation"}],"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/for-lenders/questions/what-are-the-specific-thresholds-or-rules-for-determining-affiliation-based-on-common-mana","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."]}