Glossary · Reading the business
Affiliation Rule
In short
SBA rules that determine if one business is controlled by or connected to another, even if not formally owned. This matters for size standards and eligibility.
What it means in a deal
If you or a "key principal" in your acquisition already own or control other businesses, the SBA combines their revenues and employee counts to determine if you still meet the small business size standard. Your lender will use Form 1919 to identify all relevant entities. Hidden affiliations can disqualify your loan.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Affiliation Rule
- How does the 'franchise rule' affect affiliation calculations for SBA 7(a) eligibility?
- How does the SBA define 'total control' rule to determine affiliation for size standards?
- How does the 'totality of the circumstances' rule apply when determining affiliation for SBA size standards?
- How does the "franchise rule" specifically apply to determine affiliation for an independent dealer or licensee model?
- When does identity of interest trigger affiliation for size determination under SBA rules?
- What are the specific thresholds or rules for determining affiliation based on common management, beyond direct ownership?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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