Do your other businesses count as affiliates for an SBA loan?
Short answer
Only in set ownership cases. SBA looks at ownership over 50% and, for some owners, 20% or more in the same 3-digit NAICS subsector. A company you personally own in a different subsector is not an affiliate on ownership grounds (13 CFR § 121.301(f)).
It depends on who owns what and whether the businesses share a 3-digit NAICSThe federal code system that sorts businesses by industry. subsector. 13 CFR § 121.301(f) lists the cases, and SOP 50 10 8.1, Sec. A, Ch. 1, Para. D.4 repeats them.
The ownership tests
Two businesses are affiliated when:
- The applicant owns more than 50% of the other business.
- A business owns more than 50% of the applicant. If that owner also owns more than 50% of another business in the applicant's subsector, all three are affiliated.
- You own more than 50% of the applicant and more than 50% of another business in the same subsector.
- No one owns more than 50% of the applicant, and a 20%-or-more owner is a business in the same subsector.
- No one owns more than 50%, and a 20%-or-more owner also owns more than 50% of another business in the same subsector.
What this means
If you own all of a restaurant (NAICS 722) and all of a roofing company (NAICS 238), those two are not affiliated by ownership. Two restaurants you own would be.
Control is no longer the test
SBA's 2023 final rule (88 FR 21074) removed affirmative and negative control as a basis for affiliation. Stock options and convertible securities are treated as already exercised (§ 121.301(f)(2)).
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