For SBA lenders
Short answer
Control, whether positive (majority ownership) or negative (blocking rights), triggers affiliation when one party has the power to direct the management or policies of another entity, regardless of the extent of ownership.
13 CFR 121.103 states that affiliation arises when one business controls or has the power to control another, or a third party controls both. Control can be evidenced by majority ownership, contractual agreements, common management, or even familial relationships. The SBA considers both actual and potential control.
Company A owns 40% of Company B, but the operating agreement grants Company A veto power over all major decisions. The lender determines Company A controls Company B, making them affiliated for size standard purposes.
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.
More on affiliation & size
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day