{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/when-does-ownership-by-a-private-equity-fund-trigger-affiliation-for-sba-size-standard-pur","api_url":"https://dealroom.so/api/public/questions/when-does-ownership-by-a-private-equity-fund-trigger-affiliation-for-sba-size-standard-pur","question":"When does ownership by a private equity fund trigger affiliation for SBA size standard purposes?","topic":"Affiliation & size","audience":"lender","bot_mode":"lender","short_answer":"Ownership by a private equity fund triggers affiliation if the fund has the power to control the applicant business, typically through majority ownership, board representation, or management agreements.","rule":"Private equity funds, as institutional investors, are subject to SBA affiliation rules. If a fund's investment structure, board control, or contractual agreements grant it the ability to direct or dominate the applicant business's management and policies, then all businesses within the fund's portfolio that it controls are aggregated for size purposes.","example":"A private equity fund owns 60% of Company A and 70% of Company B. If Company A applies for a 7(a) loan, the fund's ownership means Company A and Company B are affiliated, and their revenues/employees must be combined to determine size eligibility.","what_lenders_check":"Lenders must carefully review the ownership structure and governance documents when private equity funds are involved to accurately determine control and affiliation. Misjudging affiliation can lead to an ineligible loan, risking the SBA guaranty.","required_facts":["Private equity fund","Affiliation trigger","Control","Majority ownership","Board representation","Size standards"],"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":"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":"Private equity fund","url":"https://dealroom.so/glossary/private-equity-fund"},{"term":"SBA size standard","url":"https://dealroom.so/glossary/sba-size-standard"},{"term":"Size standard","url":"https://dealroom.so/glossary/size-standard"},{"term":"Business size standard","url":"https://dealroom.so/glossary/business-size-standard"},{"term":"Size standard compliance","url":"https://dealroom.so/glossary/size-standard-compliance"},{"term":"Alternative size standard","url":"https://dealroom.so/glossary/alternative-size-standard"}],"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/when-does-ownership-by-a-private-equity-fund-trigger-affiliation-for-sba-size-standard-pur","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."]}