Glossary · People and paperwork
Impermissible Affiliation
In short
This occurs when the SBA considers your business and another entity too closely related, making your business ineligible for an SBA loan. It matters because it can kill your loan application before it even starts.
What it means in a deal
The SBA has strict rules on what constitutes "affiliation," looking at factors like ownership, management, and contractual relationships. If your deal involves prior business relationships with the seller or other entities, or if you have significant ownership in other businesses, you need to scrutinize potential affiliation issues early. Work with your lender to ensure your deal structure doesn't trigger an impermissible affiliation.
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 Impermissible Affiliation
- How does a lender determine if a franchise agreement contains impermissible control provisions not listed on the Directory?
- How does the SBA define 'affiliation' when checking business size?
- How does common management trigger affiliation for size standard purposes?
- How does common management trigger affiliation for SBA size standard purposes?
- What constitutes 'common management' triggering affiliation for SBA 7(a) size determination?
- What specific conditions trigger affiliation due to contractual relationships or franchise agreements?
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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