For SBA lenders
Short answer
Ownership of options, warrants, or convertible securities can trigger affiliation if the holder has the power to acquire an ownership interest that would result in control, regardless of whether the option is currently exercisable.
The SBA considers all stock options, convertible securities, and agreements to merge as if exercised or completed. If converting these instruments would result in an individual or entity gaining control (typically 50% or more ownership, or other indicators of control) over the applicant business, then affiliation is established, and their respective size metrics are aggregated.
Investor X holds warrants allowing conversion into 60% of Company Y's voting stock. Even if these warrants are not yet exercisable, Investor X is considered affiliated with Company Y because they have the "power to control" through the potential conversion.
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
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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