{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-specific-criteria-determine-if-two-businesses-are-affiliated-due-to-identity-of-inter","api_url":"https://dealroom.so/api/public/questions/what-specific-criteria-determine-if-two-businesses-are-affiliated-due-to-identity-of-inter","question":"What specific criteria determine if two businesses are affiliated due to 'identity of interest' for size standards?","topic":"Affiliation & size","audience":"lender","bot_mode":"lender","short_answer":"Identity of interest affiliation occurs when two businesses, though not formally linked, share common interests such that one can exercise control over the other, particularly among close relatives or entities with financial ties.","rule":"The SBA's 'identity of interest' rule states that if individuals or entities with common investments, economic dependency, or familial relationships (e.g., spouses, parents, children, siblings) have identical or substantially identical business or economic interests, and one can exercise control or have a strong incentive to do so, they may be deemed affiliated. This is a rebuttable presumption that lenders must assess.","example":"A borrower applies for a 7(a) loan. Her brother owns a major supplier to her business, accounting for 70% of her COGS. Given the close familial relationship and significant economic dependency, the lender must investigate potential 'identity of interest' affiliation.","what_lenders_check":"Lenders must thoroughly investigate all potential 'identity of interest' affiliations, especially among close relatives or economically dependent businesses. Failure to identify and account for such affiliations can lead to an incorrect size determination and jeopardize the loan's eligibility and guaranty.","required_facts":["Familial relationships","Economic dependency","Common investments","Control potential","Rebuttable presumption"],"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":"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":"Affiliated businesses","url":"https://dealroom.so/glossary/affiliated-businesses"},{"term":"Identity of Interest","url":"https://dealroom.so/glossary/identity-of-interest"},{"term":"Identity of interest affiliation","url":"https://dealroom.so/glossary/identity-of-interest-affiliation"},{"term":"Identity of Interest Transaction","url":"https://dealroom.so/glossary/identity-of-interest-transaction"},{"term":"Industry-Specific Size Standards","url":"https://dealroom.so/glossary/industry-specific-size-standards"},{"term":"Eligibility Criteria","url":"https://dealroom.so/glossary/eligibility-criteria"}],"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-specific-criteria-determine-if-two-businesses-are-affiliated-due-to-identity-of-inter","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."]}