{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-for-a-business-to-qualify-as-small-under-the-alter","api_url":"https://dealroom.so/api/public/questions/what-specific-documentation-is-required-for-a-business-to-qualify-as-small-under-the-alter","question":"What specific documentation is required for a business to qualify as 'small' under the alternative size standard?","topic":"Affiliation & size","audience":"lender","bot_mode":"lender","short_answer":"To qualify under the alternative size standard, a business must submit a certification that its tangible net worth is less than $15 million and its average net income for the preceding two years is $5 million or less.","rule":"The SBA provides an alternative size standard for businesses that may exceed the revenue-based or employee-based size standards for their industry but are still considered small. This alternative test requires the business's tangible net worth to be less than $15 million and its average net income for the two fiscal years preceding the application to be $5 million or less. A formal certification or attestation from the business is required.","example":"A construction company, with annual revenues exceeding its industry's size standard, applies for a 7(a) loan. To qualify, the lender obtains a certification from the company's CPA confirming its tangible net worth is $12 million and its average net income for the last two years was $4 million, thus meeting the alternative size standard.","what_lenders_check":"Lenders must obtain accurate, verifiable documentation for both tangible net worth and average net income from an independent source (e.g., CPA-prepared statements) when using the alternative size standard. Miscalculation or insufficient proof could render the borrower ineligible and negate the SBA guaranty.","required_facts":["Tangible net worth","Average net income","Two-year look-back","Formal certification"],"source_families":["13 CFR Part 121 - Small Business Size Regulations","SBA Table of Size Standards"],"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"}],"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":"Small Business Size Standards","url":"https://dealroom.so/glossary/small-business-size-standards"},{"term":"Small business size standard","url":"https://dealroom.so/glossary/small-business-size-standard"},{"term":"For-profit small business","url":"https://dealroom.so/glossary/for-profit-small-business"},{"term":"Alternative size standard","url":"https://dealroom.so/glossary/alternative-size-standard"},{"term":"Industry-Specific Size Standards","url":"https://dealroom.so/glossary/industry-specific-size-standards"},{"term":"Small business","url":"https://dealroom.so/glossary/small-business"}],"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-documentation-is-required-for-a-business-to-qualify-as-small-under-the-alter","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."]}