For SBA lenders
Short answer
Common management triggers affiliation when individuals or entities controlling the management of one business also control the management of another. Factors include shared officers, directors, or key employees, and the ability to control decision-making.
SBA's affiliation rules are designed to prevent large businesses from circumventing size standards by organizing into smaller entities. Common management exists when one or more individuals or entities have the power to control the board of directors, management, or operational decisions of both businesses. This 'power to control' is the key factor, even if not exercised.
A borrower for a 7(a) loan owns a construction company. The lender discovers that the borrower is also the CEO and sole director of an unrelated real estate development firm. Despite no direct ownership link between the firms, the common management (the borrower) means the two businesses are affiliated for size determination.
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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