For SBA lenders
Short answer
The 'total control' rule for affiliation means one entity has the power to control another, regardless of whether that power is exercised, or if there is common ownership.
Affiliation can be found when a person or entity has the power to control another. This power can be contractual (e.g., through management agreements), or through common ownership, shared management, or economic dependence. Even if the control is not actively exercised, the mere existence of the power to control is sufficient to trigger affiliation for size standard purposes.
Mr. Jones owns 45% of Company A and has a contractual agreement granting him veto power over all significant operational and financial decisions of Company B, in which he owns only 10%. Even with minority ownership in Company B, his contractual veto power indicates 'total control,' triggering affiliation between Company A and Company B.
Insider move
Lenders must look beyond simple ownership percentages and investigate any contractual rights, familial relationships, or economic dependencies that could grant one entity or individual the power to control another. Misidentifying affiliation leads to incorrect size determinations and potential guaranty denial.
SOP 50 10 - Lender and Development Company Loan Programs
13 CFR Part 121 - Small Business Size Regulations
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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