{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-specific-scenarios-involving-shared-directors-officers-or-key-employees-constitute-co","api_url":"https://dealroom.so/api/public/questions/what-specific-scenarios-involving-shared-directors-officers-or-key-employees-constitute-co","question":"What specific scenarios involving shared directors, officers, or key employees constitute 'common management' triggering affiliation for SBA size determination?","topic":"Affiliation & size","audience":"lender","bot_mode":"lender","short_answer":"Common management triggers affiliation for SBA size determination when identical or overlapping officers, directors, or key employees control the management and daily business operations of two or more entities. This common control leads to aggregating the entities' revenues or employees for size purposes.","rule":"SBA rules dictate that entities are affiliated if they have common management, meaning one or more individuals or entities control the management of two or more businesses. This typically occurs when the same person or group of people serve as officers, directors, or key employees (those who have critical influence over the strategic direction or operational decisions) in multiple businesses. The SBA looks beyond titles to actual influence and control. When common management is established, all businesses under that common management are aggregated to determine compliance with SBA size standards.","example":"A lender evaluates a 7(a) loan application for 'Company A.' During due diligence, they discover the same individual serves as CEO for Company A and also for 'Company B,' which operates in a similar industry. This common CEO role, exercising control over both entities, triggers affiliation, requiring the lender to combine the revenues of Company A and Company B for size standard determination.","what_lenders_check":"Lenders must meticulously investigate all principals and key employees to identify potential common management affiliations. Failing to recognize and aggregate affiliated entities for size determination can result in an ineligible loan and subsequent guaranty denial.","required_facts":["Common management","Affiliation trigger","Shared directors","Overlapping officers","Key employees"],"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":"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"},{"question":"When does ownership by a private equity fund trigger affiliation for SBA size standard purposes?","url":"https://dealroom.so/for-lenders/questions/when-does-ownership-by-a-private-equity-fund-trigger-affiliation-for-sba-size-standard-pur"}],"related_terms":[{"term":"Officers/Directors","url":"https://dealroom.so/glossary/officers-directors"},{"term":"Key employees","url":"https://dealroom.so/glossary/key-employees"},{"term":"Common management","url":"https://dealroom.so/glossary/common-management"},{"term":"Key Management","url":"https://dealroom.so/glossary/key-management"},{"term":"Key Management Personnel","url":"https://dealroom.so/glossary/key-management-personnel"},{"term":"Officers","url":"https://dealroom.so/glossary/officers"}],"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-scenarios-involving-shared-directors-officers-or-key-employees-constitute-co","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."]}