For SBA lenders
Short answer
Affiliation for businesses operating under a license agreement is determined if the licensor (or any third party) has the power to control the licensee, either through the terms of the agreement, common ownership, or common management.
SBA affiliation rules extend beyond simple majority ownership. Control can be found through contractual relationships, such as license agreements, if the terms grant the licensor significant influence over the licensee's operations, management, or critical business decisions. Lenders must review the license agreement thoroughly for clauses that indicate control, such as approval rights over management decisions, financial policies, or strategic direction.
A borrower applies for a 7(a) loan to operate a business under a specific software license. The license agreement grants the licensor veto power over major capital expenditures, the right to appoint a board observer, and requires adherence to strict operational guidelines. The lender must assess if these provisions confer 'control' upon the licensor, potentially triggering affiliation 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.
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