# Who counts as an Associate of a small business under SBA rules?

**Short answer:** An officer, director, owner of more than 20% of the equity, or Key Employee. It also includes entities those people own or control at 20% or more, and anyone in control of or controlled by the business. Source: 13 CFR § 120.10.

Canonical page: https://www.sbaexpress.loans/answers/who-counts-as-an-associate-of-a-small-business/
Last checked: 2026-11-08

An Associate is a person or entity tied closely to the applicant. 13 CFR § 120.10 and SOP 50 10 8.1, Appendix 3 use the same definition.

## The definition

An Associate of a small business is:

- An officer, director, owner of more than 20% of the equity, or Key Employee.
- Any entity in which one or more of those individuals owns or controls at least 20%.
- Any individual or entity in control of or controlled by the small business, except an SBA-licensed Small Business Investment Company.

A Key Employee has the experience, qualifications or required license to run the business. The term also covers someone who manages the business day to day for the owners, including hiring, firing, payroll and finances (Appendix 3).

## Timing

The Associate relationship begins six months before the date of the loan application and continues as long as the loan is outstanding.

## Why it matters

Associates drive several rules:

- The criminal status test in 13 CFR § 120.110(n).
- The prior loss test in 13 CFR § 120.110(q).
- The limit on loan proceeds paid to Associates (13 CFR § 120.130(a)).

## Not the same as guarantors

Guaranties start at 20% or more ownership. Associate status begins above 20%.

## Sources

- [13 CFR § 120.10](https://www.ecfr.gov/current/title-13/section-120.10)
- [SOP 50 10 8.1, Appendix 3, Associate (p. 297) and Key Employee (about p. 301)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.130(a)](https://www.ecfr.gov/current/title-13/section-120.130)
- [13 CFR § 120.110(n), (q)](https://www.ecfr.gov/current/title-13/section-120.110)
- [SOP 50 10 8.1, Sec. A, Ch. 5, Para. A (p. 93)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)