{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-is-the-maximum-tangible-net-worth-for-a-business-to-be-considered-small-under-the-alt","api_url":"https://dealroom.so/api/public/questions/what-is-the-maximum-tangible-net-worth-for-a-business-to-be-considered-small-under-the-alt","question":"What is the maximum tangible net worth for a business to be considered 'small' under the alternative size standard?","topic":"Affiliation & size","audience":"lender","bot_mode":"lender","short_answer":"Under the alternative size standard, a business is considered 'small' if its tangible net worth is not more than $15,000,000 and its average net income after federal income taxes for the preceding two years is not more than $5,000,000.","rule":"For businesses that do not meet the primary NAICS-based size standards, the SBA offers an alternative size standard. This dual test requires both the tangible net worth and the average net income (after federal income taxes, excluding any carryover losses) to be below specific thresholds for the two preceding fiscal years.","example":"A manufacturing business has a tangible net worth of $14,000,000 and average net income of $4,500,000 over the past two years. While it might exceed its NAICS code's employee count standard, it would qualify as small under the alternative size standard for a 7(a) loan.","what_lenders_check":"Lenders must accurately calculate tangible net worth and average net income, ensuring all exclusions and definitions are correctly applied. This often requires reviewing audited financial statements and tax returns.","required_facts":["Alternative size standard","Tangible net worth","Net income","NAICS code","Small business"],"source_families":["13 CFR Part 121 - Small Business Size Regulations","SBA Table of Size Standards","SOP 50 10 - Lender and Development Company Loan Programs"],"official_sources":[{"title":"13 CFR Part 121 - Small Business Size Regulations","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-121"},{"title":"SBA Table of Size Standards","url":"https://www.sba.gov/document/support-table-size-standards"},{"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"}],"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":"Tangible net worth","url":"https://dealroom.so/glossary/tangible-net-worth"},{"term":"Negative Tangible Net Worth","url":"https://dealroom.so/glossary/negative-tangible-net-worth"},{"term":"Net Worth","url":"https://dealroom.so/glossary/net-worth"},{"term":"For-profit small business","url":"https://dealroom.so/glossary/for-profit-small-business"},{"term":"Negative Net Worth","url":"https://dealroom.so/glossary/negative-net-worth"},{"term":"Personal Net Worth","url":"https://dealroom.so/glossary/personal-net-worth"}],"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/what-is-the-maximum-tangible-net-worth-for-a-business-to-be-considered-small-under-the-alt","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."]}