Information notice 5000-20007

Review of Agreements for Exception to Affiliation Based on Economic Dependence in the Business Loan Programs

SBA’s interim final rule on Express Loan Programs and Affiliation Standards was effective on March 11, 2020.

The interim final rule on SBA Express Loan Programs and Affiliation Standards (85 FR 7622) became effective on March 11, 2020. As part of the interim final rule, businesses may be affiliated through “economic dependence.” This type of affiliation may arise when a business derived more than 85 percent of its receipts over the previous three fiscal years from a contractual relationship with another business unless (A) the contract does not restrict the concern in question from selling the same type of products or services to another purchaser; or (B) SBA agrees that the terms of the contract do not provide the purchaser with control or the power to control the seller (the Applicant small business). (85 FR 7652).

SBA posted guidance on its website at https://www.sba.gov/offices/headquarters/oca/spotlight on how SBA would apply the exception in (B) above. SBA is accepting comments on the guidance until April 10, 2020.

Any questions about this notice should be directed to EconomicDependence@sba.gov.

Download .pdf
File size: 151KB
Effective: March 11, 2020
Owned by: Office of Financial Assistance
Related Programs: 7(a), CDC/504, Community Advantage, Credit/Capital
Last updated January 28, 2021