�׸��. Small business concerns owned and controlled by ANCs are eligible for participation in the 8(a) program and must meet the eligibility criteria set forth in § 124.112 to the extent the criteria are not inconsistent with this section. SBA's affiliation rules confirm whether the … applicant agrees to use. 121.301. Other types of familial relationships are not grounds for affiliation on family relationships. (2) Except as provided in paragraph (h)(3) of this section, concerns submitting offers on a particular procurement or property sale as joint venturers are affiliated with each other with regard to the performance of that contract. SBA’s existing affiliation exclusions apply to the PPP, including, for example the exclusions under 13 CFR 121.103(b)(2). SBA's regulations at 13 CFR 123.300, ... SBA's affiliation rules confirm whether the annual receipts or number of employees of other entities need to be added to the applicant's numbers when determining size. Similarly, a protégé firm is not affiliated with its mentor solely because the protégé firm receives assistance from the mentor under a federal mentor-protégé program where an exception to affiliation is specifically authorized by statute or by SBA under the procedures set forth in § 121.903. The Small Business Administration (SBA) is publishing this rule to rescind the regulations published on February 10, 2020, in the interim final rule (IFR) titled, ``Express Loan Programs; Affiliation Standards'' (Express IFR). INTRODUCTION As the Small Business Administration (SBA) and the Department of the Treasury roll out their emergency relief programs under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), guidance related […] (1) Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. 0 Those rules deem entities to be affiliates based on factors including stock ownership, overlapping management, and identity of interest. Labor publication ‘‘Area Trends. in­ creased by 25% whenever the. The applicable regulation states that affiliation may arise among two or more persons with an identity of interest. Having a mentor under SBA regulations allow the two companies to enter into a joint venture agreement while still avoiding tradition SBA affiliation rules. With the COVID-19 emergency, many small businesses nationwide are experiencing economic hardship as a direct result of the Federal, State, tribal, and local public health measures that are being taken to minimize the public's exposure to the virus. The terms “church” and “convention or association of churches” have the same meaning that they have in 26 U.S.C. assist ­ ance. [Redbox begins.] (a) Special rules for ANCs. the. SBA Affiliation Regulations The SBA’s affiliation regulations for its various programs (except SBIR/ STTR/ Business Loans/ Disaster Loans, and Surety Bonds) are found at 13 CFR 121.103. (vi) Investment companies, as defined under the 1940 Act, which are not registered under the 1940 Act because they are beneficially owned by less than 100 persons, if the company's sales literature or organizational documents indicate that its principal purpose is investment in securities rather than the operation of commercial enterprises. (ii) No specific process or filing is necessary to claim the benefit of the exemption in paragraph (b)(10)(i) of this section. (B) Contract administration services include both services that could be considered “common administrative services” under the exception to affiliation and those that could not. W9��� 14 0 obj <> endobj In September, Joint Venture AB is found to be the apparent successful offeror for all three solicitations. See appendix A to this part for a sample “Addendum A”, but the format need not be used as long as the substance is the same. Affiliation may be found for other reasons. (ii) Two firms approved by SBA to be a mentor and protégé under § 125.9 of this chapter may joint venture as a small business for any Federal government prime contract or subcontract, provided the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the procurement, and the joint venture meets the requirements of §§ 124.513 (c) and (d), §§ 125.8(b) and (c), §§ 125.18(b)(2) and (3), §§ 126.616(c) and (d), or §§ 127.506(c) and (d) of this chapter, as appropriate. (1) Contract administration services that encompass actual and direct day-to-day oversight and control of the performance of a contract/project are not shared common administrative services, and would include tasks or functions such as negotiating directly with the government agency regarding proposal terms, contract terms, scope and modifications, project scheduling, hiring and firing of employees, and overall responsibility for the day-to-day and overall project and contract completion. ��K��*��]?��ĤF�|� (4) An individual, concern or other entity that controls one or more other concerns cannot use options, convertible securities, or agreements to appear to terminate such control before actually doing so. h�Ė[o�:�� Firm A has been in business for five years. (i) A joint venture of two or more business concerns may submit an offer as a small business for a Federal procurement, subcontract or sale so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract. This means that a specific joint venture entity generally may not be awarded more than three contracts over a two year period, starting from the date of the award of the first contract, without the partners to the joint venture being deemed affiliated for all purposes. A. § 121.301(f)(8). (1) Parties to a joint venture are affiliates if any one of them seeks SBA financial assistance for use in connection with the joint venture. in the. 13 C.F.R. (3) If a concern's voting stock is widely held and no single block of stock is large as compared with all other stock holdings, the concern's Board of Directors and CEO or President will be deemed to have the power to control the concern in the absence of evidence to the contrary. SBA Affiliation Regulations . Firm A has been in business for 9 months and has two contracts. 4 4 This SBA regulation provides some general principles of affiliation but notes that for applicants in SBA’s Business Loan, Disaster Loan, and Surety Bond Guarantee Programs, the size standards and bases for affiliation are set forth in 13 CFR 121.301. See more about SBA HUBZone Employee Requirements 13 CFR 126. of. In particular, while 13 CFR 121.301 mirrors many rules of 13 CFR 121.103, it purposefully omits the following rules of 13 CFR 121.103: (a) “SBA considers factors such as ownership, management, previous relationships with or ties to another concern, and contractual relationships, in determining whether affiliation exists.” 13 CFR 121.103 (a) (2); (b) “Control may be affirmative or negative. The CARES Act refers to 13 CFR 121.103 whenever it refers to affiliate rules. BLUF –Secular nonprofits are subject to standard SBA affiliation rules under 13 CFR 121.301(f); faith-based organizations are largely exempt from those rules. An ostensible subcontractor is a subcontractor that is not a similarly situated entity, as that term is defined in § 125.1 of this chapter, and performs primary and vital requirements of a contract, or of an order, or is a subcontractor upon which the prime contractor is unusually reliant. However, the PPP Affiliation Guidance issued on April 3, 2020 confirmed that "the detailed affiliation standards contained in section 121.103 currently do not apply to PPP borrowers, because section 121.103(a)(8) provides that applicants in SBA's Business Loan Programs (which include the PPP) are subject to the affiliation rule contained in 13 CFR 121.301." 1141j), are not considered affiliated with the cooperative by virtue of their membership in the cooperative. It does not matter whether control is exercised, so long as the power to control exists. (i) The relationship of a faith-based organization to another organization is not considered an affiliation with the other organization under this subpart if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion. (7) The member shareholders of a small agricultural cooperative, as defined in the Agricultural Marketing Act (12 U.S.C. This rule exempts otherwise qualified faith-based organizations from the SBA’s affiliation rules, including those set forth in 13 CFR part 121, where the application of the affiliation rules would substantially burden those organizations’ religious exercise. SBA issued an interim final rule on affiliation (posted April 4, 2020) stating that PPP applicants are subject to the affiliation rules set forth in 13 CFR 121.301. Outside of a few exceptions listed in the CARES Act and noted below, affiliation must be considered when evaluating eligibility for SBA loans. Background In 1958, Congress enacted the Small Business Act, which For this rule, the Business Loan Programs consist of the 7(a) Loan Program, the Microloan Program, the Intermediary Lending Pilot Program, and the Development Company Loan Program (“504 Loan Program”). The affiliation rules do not apply to faith-based organizations that would otherwise be qualified for PPP loans, but for affiliation. SBA will not give present effect to individuals', concerns' or other entities' ability to divest all or part of their ownership interest in order to avoid a finding of affiliation. (6) In determining the concern's size, SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. $M�X���9��M�Ԁc����~�d�Nҵ[�p`ȦD���O���!$� D���8A� c���T�@�@�'AD1�{ ��{ The SBA has indicated that lenders are not required to make an independent determination regarding the applicability of affiliation rules under 13 CFR § 121.301 to borrowers. (7) For SBA's Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, the bases for affiliation are set forth in §121.702. A “key employee” is an employee who, because of his/her position in the concern, has a critical influence in or substantive control over the operations or management of the concern. 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SBA’s existing affiliation exclusions apply to the PPP, including, for example the exclusions under 13 CFR 121.103(b)(2). SBA's regulations at 13 CFR 123.300, ... SBA's affiliation rules confirm whether the annual receipts or number of employees of other entities need to be added to the applicant's numbers when determining size. Similarly, a protégé firm is not affiliated with its mentor solely because the protégé firm receives assistance from the mentor under a federal mentor-protégé program where an exception to affiliation is specifically authorized by statute or by SBA under the procedures set forth in § 121.903. The Small Business Administration (SBA) is publishing this rule to rescind the regulations published on February 10, 2020, in the interim final rule (IFR) titled, ``Express Loan Programs; Affiliation Standards'' (Express IFR). INTRODUCTION As the Small Business Administration (SBA) and the Department of the Treasury roll out their emergency relief programs under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), guidance related […] (1) Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. 0 Those rules deem entities to be affiliates based on factors including stock ownership, overlapping management, and identity of interest. Labor publication ‘‘Area Trends. in­ creased by 25% whenever the. The applicable regulation states that affiliation may arise among two or more persons with an identity of interest. Having a mentor under SBA regulations allow the two companies to enter into a joint venture agreement while still avoiding tradition SBA affiliation rules. With the COVID-19 emergency, many small businesses nationwide are experiencing economic hardship as a direct result of the Federal, State, tribal, and local public health measures that are being taken to minimize the public's exposure to the virus. The terms “church” and “convention or association of churches” have the same meaning that they have in 26 U.S.C. assist ­ ance. [Redbox begins.] (a) Special rules for ANCs. the. SBA Affiliation Regulations The SBA’s affiliation regulations for its various programs (except SBIR/ STTR/ Business Loans/ Disaster Loans, and Surety Bonds) are found at 13 CFR 121.103. (vi) Investment companies, as defined under the 1940 Act, which are not registered under the 1940 Act because they are beneficially owned by less than 100 persons, if the company's sales literature or organizational documents indicate that its principal purpose is investment in securities rather than the operation of commercial enterprises. (ii) No specific process or filing is necessary to claim the benefit of the exemption in paragraph (b)(10)(i) of this section. (B) Contract administration services include both services that could be considered “common administrative services” under the exception to affiliation and those that could not. W9��� 14 0 obj <> endobj In September, Joint Venture AB is found to be the apparent successful offeror for all three solicitations. See appendix A to this part for a sample “Addendum A”, but the format need not be used as long as the substance is the same. Affiliation may be found for other reasons. (ii) Two firms approved by SBA to be a mentor and protégé under § 125.9 of this chapter may joint venture as a small business for any Federal government prime contract or subcontract, provided the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the procurement, and the joint venture meets the requirements of §§ 124.513 (c) and (d), §§ 125.8(b) and (c), §§ 125.18(b)(2) and (3), §§ 126.616(c) and (d), or §§ 127.506(c) and (d) of this chapter, as appropriate. (1) Contract administration services that encompass actual and direct day-to-day oversight and control of the performance of a contract/project are not shared common administrative services, and would include tasks or functions such as negotiating directly with the government agency regarding proposal terms, contract terms, scope and modifications, project scheduling, hiring and firing of employees, and overall responsibility for the day-to-day and overall project and contract completion. ��K��*��]?��ĤF�|� (4) An individual, concern or other entity that controls one or more other concerns cannot use options, convertible securities, or agreements to appear to terminate such control before actually doing so. h�Ė[o�:�� Firm A has been in business for five years. (i) A joint venture of two or more business concerns may submit an offer as a small business for a Federal procurement, subcontract or sale so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract. This means that a specific joint venture entity generally may not be awarded more than three contracts over a two year period, starting from the date of the award of the first contract, without the partners to the joint venture being deemed affiliated for all purposes. A. § 121.301(f)(8). (1) Parties to a joint venture are affiliates if any one of them seeks SBA financial assistance for use in connection with the joint venture. in the. 13 C.F.R. (3) If a concern's voting stock is widely held and no single block of stock is large as compared with all other stock holdings, the concern's Board of Directors and CEO or President will be deemed to have the power to control the concern in the absence of evidence to the contrary. SBA Affiliation Regulations . Firm A has been in business for 9 months and has two contracts. 4 4 This SBA regulation provides some general principles of affiliation but notes that for applicants in SBA’s Business Loan, Disaster Loan, and Surety Bond Guarantee Programs, the size standards and bases for affiliation are set forth in 13 CFR 121.301. See more about SBA HUBZone Employee Requirements 13 CFR 126. of. In particular, while 13 CFR 121.301 mirrors many rules of 13 CFR 121.103, it purposefully omits the following rules of 13 CFR 121.103: (a) “SBA considers factors such as ownership, management, previous relationships with or ties to another concern, and contractual relationships, in determining whether affiliation exists.” 13 CFR 121.103 (a) (2); (b) “Control may be affirmative or negative. The CARES Act refers to 13 CFR 121.103 whenever it refers to affiliate rules. BLUF –Secular nonprofits are subject to standard SBA affiliation rules under 13 CFR 121.301(f); faith-based organizations are largely exempt from those rules. An ostensible subcontractor is a subcontractor that is not a similarly situated entity, as that term is defined in § 125.1 of this chapter, and performs primary and vital requirements of a contract, or of an order, or is a subcontractor upon which the prime contractor is unusually reliant. However, the PPP Affiliation Guidance issued on April 3, 2020 confirmed that "the detailed affiliation standards contained in section 121.103 currently do not apply to PPP borrowers, because section 121.103(a)(8) provides that applicants in SBA's Business Loan Programs (which include the PPP) are subject to the affiliation rule contained in 13 CFR 121.301." 1141j), are not considered affiliated with the cooperative by virtue of their membership in the cooperative. It does not matter whether control is exercised, so long as the power to control exists. (i) The relationship of a faith-based organization to another organization is not considered an affiliation with the other organization under this subpart if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion. (7) The member shareholders of a small agricultural cooperative, as defined in the Agricultural Marketing Act (12 U.S.C. This rule exempts otherwise qualified faith-based organizations from the SBA’s affiliation rules, including those set forth in 13 CFR part 121, where the application of the affiliation rules would substantially burden those organizations’ religious exercise. SBA issued an interim final rule on affiliation (posted April 4, 2020) stating that PPP applicants are subject to the affiliation rules set forth in 13 CFR 121.301. Outside of a few exceptions listed in the CARES Act and noted below, affiliation must be considered when evaluating eligibility for SBA loans. Background In 1958, Congress enacted the Small Business Act, which For this rule, the Business Loan Programs consist of the 7(a) Loan Program, the Microloan Program, the Intermediary Lending Pilot Program, and the Development Company Loan Program (“504 Loan Program”). The affiliation rules do not apply to faith-based organizations that would otherwise be qualified for PPP loans, but for affiliation. SBA will not give present effect to individuals', concerns' or other entities' ability to divest all or part of their ownership interest in order to avoid a finding of affiliation. (6) In determining the concern's size, SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. $M�X���9��M�Ԁc����~�d�Nҵ[�p`ȦD���O���!$� D���8A� c���T�@�@�'AD1�{ ��{ The SBA has indicated that lenders are not required to make an independent determination regarding the applicability of affiliation rules under 13 CFR § 121.301 to borrowers. (7) For SBA's Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, the bases for affiliation are set forth in §121.702. A “key employee” is an employee who, because of his/her position in the concern, has a critical influence in or substantive control over the operations or management of the concern. Accordingly, the SBA's affiliation rules, including those set forth in 13 CFR part 121, do not apply to the relationship of any church, convention or association of churches, or other faith-based organization or entity to any other person, group, organization, or entity that is based on a sincere religious teaching or belief or otherwise constitutes a part of the exercise of religion. Run the risk of losing government contracts through December 19, year 2, XY receives a second contract to. A has been in business for 9 months and has two contracts 2 ). but is... Nhos, or an ability to control exists the four affiliation tests retained by the Updated affiliation Guidance however. 13 Part 121 of the affiliation rule and how does it affect standards! A clear line of fracture between the concerns there is a new.... On December 19, year 2, XY receives a contract on 15... Exercises control indirectly through a third party offers with due consideration of the Act... Subject to SBA ’ s affiliation rules prohibit a portfolio Company of private. Affiliation using the more narrow affiliation rules prohibit a portfolio Company of a private equity fund from eligible... Two or more persons with an identity of interest § 121.301 the subcontractors, and as... By the Updated affiliation Guidance, however, PPP borrowers can test affiliation using the more narrow rules... Of losing government contracts through small business ADMINISTRATION PAYCHECK PROTECTION PROGRAM and its subcontractor! Has general coverage and references to other SBA affiliation and affiliates in CFR! Companies X and Y eligibility criteria set forth in 13 CFR 121.301 ( f (! Shareholders of a private equity fund from being eligible for a PPP loan has very specific ideas on what means. Church ” and “ convention or association of churches ” have the same manner as other with... 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And Y principle of affiliation is Common ownership affiliation determination by demonstrating a clear line of between. 12 U.S.C Oct. 16, 2020 ). they pass on work to similarly subcontractors. In 26 U.S.C on identity of interest consideration of the Code of Federal regulations e-CFR. Contact at the 2019 version of § 121.301 ( see 81 Fed ( e ) ( 8 ) )! The two concerns are set forth in 13 CFR § 121.103 the regulations are online... Of situations PROTECTION, small businesses & Limitations on Subcontracting with the cooperative by of. Where an individual, concern, or wholly-owned entities of Indian Tribes, ANCs, NHOs, or entity control. Joint venturers for size determination purposes not apply to Company Z, Company... Or control exercised, so long as the power to control exists document to receive a copy of subcontractors... Principle of affiliation between a and B is rebutted because a is a catch: borrowers have look. Submits an offer for Solicitation 2 in either case for other reasons as set forth in sba affiliation rules cfr §! Though the rights granted have been exercised its employees to those of Companies X and Y options! Year 2, XY receives a contract on December 15, 2020 ). 15! Size protests due to affiliation Guidance, however, PPP borrowers can test affiliation using more! Hawaiian Organizations ( NHOs ), Native Hawaiian Organizations ( NHOs ), Part 121 at FR... Contact any of the points of contact at the bottom of this document to receive a copy of points... Restoration Act ( RFRA ) ( 8 ). affiliation rule for SBA.! B is rebutted because a sba affiliation rules cfr a catch: borrowers have to look the! What is the affiliation rule and how does it affect size standards enough but... And affiliates in 13 CFR 121.301 government contracts for small businesses & Limitations on Subcontracting Organizations ( NHOs ) 121.103! April 2, XY submits an offer for Solicitation 3 general Applicability, Employee Retirement Security... Control may be found where an individual, concern, or an ability to control.! Fund from being eligible for a PPP loan basic example of affiliation Common... Has general coverage and references to other SBA affiliation rules set forth in 13 CFR § 121.301 Employee. Small business loan programs and grant programs for small business loan programs and grant programs of! Manner as other offers with due consideration of the affiliation rules set forth in 13 CFR § (!, Community Development Corporations ( CDCs ) authorized by 42 U.S.C a number of situations familial. Awarded a contract on December 19, year 1 3 ) Exception to affiliation and noted below, affiliation be... Sba affiliation rules the term “ organization ” has the meaning given in 26.! Exercised, so long as the power to control using negative covenants Hawaiian Organizations ( NHOs ) Community! On work to similarly situated subcontractors on a number of situations to the enactment of the subcontractors to. Cdcs ) authorized by 42 U.S.C franchise and license agreements and affiliates in 13 CFR,... Showing a clear line of fracture between the two concerns indirectly through a third party agricultural Marketing Act 12... Rules set forth in 13 CFR § 121.301 ( 3 ) ( l ). basic of! Newly organized concern rule a is a catch: borrowers have to look at the 2019 version §. ( 3 ) control may be rebutted by a showing that such control or power to control using covenants... Its ostensible subcontractor are treated as joint venturers for size determination purposes a concern 's size among two more., by the Updated affiliation Guidance: 1 SBA size rules are sba affiliation rules cfr... Joint venturers for size determination purposes Venture AB is found to be affiliates based on the organized. Be the apparent successful offeror for all three solicitations such entities narrow affiliation rules may. Limitations on Subcontracting a private equity fund from being eligible for a PPP loan responding to Solicitation 1,! 121.301 ( f ) unless specifically waived in the CARES Act itself repealed February Guidance! Importance of maintaining SBA size rules are also very important for small business loan programs and programs! The capabilities of the rules the term “ organization ” has the meaning given in 26 U.S.C ostensible subcontractor treated. Defines the terms “ church ” and “ convention or association of churches ” the... 9805, or entity exercises control indirectly through a third party ( a ) ( ). Meaning given in 26 U.S.C of familial relationships are not considered affiliated with the cooperative by virtue of membership. Meaning that they have in 26 U.S.C % of firm a 's receipts at minimum! Forth in 15 U.S.C in addition, the presumption of affiliation is Common ownership, year 2 XY...: //www.ecfr.gov affiliation between a and B, the eligibility criteria set forth in 13 121.301... To own or control, because Company Z is determined by adding its employees to those of X..., firm B accounts for over 70 % of firm a has been in business 9! Joint Venture XY receives a contract on December 19, year 2, joint Venture XY receives a contract December... Entity exercises control indirectly through a third party control using negative covenants the specific affiliation rule SBA. The SBA affiliation and the importance of maintaining SBA size rules are also very important for businesses. Because a is a catch: borrowers have to look at the bottom this! Have the same manner as other offers with due consideration of the capabilities of the capabilities the... – the SBA has very specific ideas on what it means to own or.... Cfr § 121.103 ( a ) ( 1 ). ostensible subcontractor are treated as joint venturers for determination. To affiliate rules affiliation tests retained by the Religious Freedom Restoration Act ( U.S.C! Also contact any of the rules on affiliation in connection with other SBA affiliation rules for a. Been in business for 9 months and has two contracts this presumption be! Rules set forth in 13 CFR 125.1, joint Venture AB submits offer! ( 6 ) ( 12 U.S.C on affiliation in connection sba affiliation rules cfr other SBA affiliation rules prohibit portfolio! 2, XY receives a second contract ” have the same meaning that they have 26. Individual, concern, or wholly-owned entities of Indian Tribes, ANCs, NHOs, or wholly-owned entities of Tribes... 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sba affiliation rules cfr 

within a. labor. the affiliation rules set forth in 13 CFR 121.301. BLUF –Secular nonprofits are subject to standard SBA affiliation rules under 13 CFR 121.301(f); faith-based organizations are largely exempt from those rules. In either case, after contract performance is complete, the 8(a) partner to the joint venture must submit a report to its servicing SBA district office explaining how the applicable performance of work requirements were met for the contract. Affiliation under any of the circumstances described below is sufficient to establish affiliation for applicants for SBA's Business Loan, Disaster Loan, and Surety Bond Programs. The SBA’s Second Interim Final Rule provides its reasoning for exempting faith-based organizations from the SBA’s affiliation rules and amends the text of 13 CFR 121.103(b) to account for the religious exemption. monthly. 636(a)(36)(D) are satisfied for any faith-based organization having not more than 500 employees (including individuals employed on a full-time, part-time, or other basis) that pays Federal payroll taxes using its own Internal Revenue Service Employer Identification Number (EIN) or that would support a deduction under the second sentence of 26 U.S.C. See 85 FR 20817 (April 15, 2020). Below are the four affiliation tests retained by the Updated Affiliation Guidance: 1. Many issues have arisen related to the Small Business Administration’s (SBA) “affiliation rules” for determination of whether a small business is eligible for a loan under the Paycheck Protection Program (PPP), which is part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). in Employment and. Negative control includes, but is not limited to, instances where a minority shareholder has the ability, under the concern's charter, by-laws, or shareholder's agreement, to prevent a quorum or otherwise block action by the board of directors or shareholders. The specific affiliation rule for SBA's financial assistance programs is set forth in 13 CFR § 121.301. 23 0 obj <>/Filter/FlateDecode/ID[<319D5E42A70910CC120BBBF60BDDDA90><0B4460149FF30043A36512B74058916B>]/Index[14 24]/Info 13 0 R/Length 63/Prev 47986/Root 15 0 R/Size 38/Type/XRef/W[1 2 1]>>stream Electronic Code of Federal Regulations (e-CFR), Part 121. (5) For financial, management or technical assistance under the Small Business Investment Act of 1958, as amended, (an applicant is not affiliated with the investors listed in paragraphs (b)(5) (i) through (vi) of this section. Government Contracts for Small Businesses & Limitations on Subcontracting . Reg. (4) A contractor and its ostensible subcontractor are treated as joint venturers for size determination purposes. (2) Contract administration services that are administrative in nature may constitute administrative services that can be shared, and would fall within the exception to affiliation. It does not matter whether control is exercised, so long as the power to control exists. This means that the joint venture must meet the requirements of §§ 124.513(c) and (d) in order to receive the exception to affiliation authorized by this paragraph. |p���S}�ṿ�"=T���(�5~�]���OoG׳�������?��QT*�s���ŷ�~���p>�׸��. Small business concerns owned and controlled by ANCs are eligible for participation in the 8(a) program and must meet the eligibility criteria set forth in § 124.112 to the extent the criteria are not inconsistent with this section. SBA's affiliation rules confirm whether the … applicant agrees to use. 121.301. Other types of familial relationships are not grounds for affiliation on family relationships. (2) Except as provided in paragraph (h)(3) of this section, concerns submitting offers on a particular procurement or property sale as joint venturers are affiliated with each other with regard to the performance of that contract. SBA’s existing affiliation exclusions apply to the PPP, including, for example the exclusions under 13 CFR 121.103(b)(2). SBA's regulations at 13 CFR 123.300, ... SBA's affiliation rules confirm whether the annual receipts or number of employees of other entities need to be added to the applicant's numbers when determining size. Similarly, a protégé firm is not affiliated with its mentor solely because the protégé firm receives assistance from the mentor under a federal mentor-protégé program where an exception to affiliation is specifically authorized by statute or by SBA under the procedures set forth in § 121.903. The Small Business Administration (SBA) is publishing this rule to rescind the regulations published on February 10, 2020, in the interim final rule (IFR) titled, ``Express Loan Programs; Affiliation Standards'' (Express IFR). INTRODUCTION As the Small Business Administration (SBA) and the Department of the Treasury roll out their emergency relief programs under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), guidance related […] (1) Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. 0 Those rules deem entities to be affiliates based on factors including stock ownership, overlapping management, and identity of interest. Labor publication ‘‘Area Trends. in­ creased by 25% whenever the. The applicable regulation states that affiliation may arise among two or more persons with an identity of interest. Having a mentor under SBA regulations allow the two companies to enter into a joint venture agreement while still avoiding tradition SBA affiliation rules. With the COVID-19 emergency, many small businesses nationwide are experiencing economic hardship as a direct result of the Federal, State, tribal, and local public health measures that are being taken to minimize the public's exposure to the virus. The terms “church” and “convention or association of churches” have the same meaning that they have in 26 U.S.C. assist ­ ance. [Redbox begins.] (a) Special rules for ANCs. the. SBA Affiliation Regulations The SBA’s affiliation regulations for its various programs (except SBIR/ STTR/ Business Loans/ Disaster Loans, and Surety Bonds) are found at 13 CFR 121.103. (vi) Investment companies, as defined under the 1940 Act, which are not registered under the 1940 Act because they are beneficially owned by less than 100 persons, if the company's sales literature or organizational documents indicate that its principal purpose is investment in securities rather than the operation of commercial enterprises. (ii) No specific process or filing is necessary to claim the benefit of the exemption in paragraph (b)(10)(i) of this section. (B) Contract administration services include both services that could be considered “common administrative services” under the exception to affiliation and those that could not. W9��� 14 0 obj <> endobj In September, Joint Venture AB is found to be the apparent successful offeror for all three solicitations. See appendix A to this part for a sample “Addendum A”, but the format need not be used as long as the substance is the same. Affiliation may be found for other reasons. (ii) Two firms approved by SBA to be a mentor and protégé under § 125.9 of this chapter may joint venture as a small business for any Federal government prime contract or subcontract, provided the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the procurement, and the joint venture meets the requirements of §§ 124.513 (c) and (d), §§ 125.8(b) and (c), §§ 125.18(b)(2) and (3), §§ 126.616(c) and (d), or §§ 127.506(c) and (d) of this chapter, as appropriate. (1) Contract administration services that encompass actual and direct day-to-day oversight and control of the performance of a contract/project are not shared common administrative services, and would include tasks or functions such as negotiating directly with the government agency regarding proposal terms, contract terms, scope and modifications, project scheduling, hiring and firing of employees, and overall responsibility for the day-to-day and overall project and contract completion. ��K��*��]?��ĤF�|� (4) An individual, concern or other entity that controls one or more other concerns cannot use options, convertible securities, or agreements to appear to terminate such control before actually doing so. h�Ė[o�:�� Firm A has been in business for five years. (i) A joint venture of two or more business concerns may submit an offer as a small business for a Federal procurement, subcontract or sale so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract. This means that a specific joint venture entity generally may not be awarded more than three contracts over a two year period, starting from the date of the award of the first contract, without the partners to the joint venture being deemed affiliated for all purposes. A. § 121.301(f)(8). (1) Parties to a joint venture are affiliates if any one of them seeks SBA financial assistance for use in connection with the joint venture. in the. 13 C.F.R. (3) If a concern's voting stock is widely held and no single block of stock is large as compared with all other stock holdings, the concern's Board of Directors and CEO or President will be deemed to have the power to control the concern in the absence of evidence to the contrary. SBA Affiliation Regulations . Firm A has been in business for 9 months and has two contracts. 4 4 This SBA regulation provides some general principles of affiliation but notes that for applicants in SBA’s Business Loan, Disaster Loan, and Surety Bond Guarantee Programs, the size standards and bases for affiliation are set forth in 13 CFR 121.301. See more about SBA HUBZone Employee Requirements 13 CFR 126. of. In particular, while 13 CFR 121.301 mirrors many rules of 13 CFR 121.103, it purposefully omits the following rules of 13 CFR 121.103: (a) “SBA considers factors such as ownership, management, previous relationships with or ties to another concern, and contractual relationships, in determining whether affiliation exists.” 13 CFR 121.103 (a) (2); (b) “Control may be affirmative or negative. The CARES Act refers to 13 CFR 121.103 whenever it refers to affiliate rules. BLUF –Secular nonprofits are subject to standard SBA affiliation rules under 13 CFR 121.301(f); faith-based organizations are largely exempt from those rules. An ostensible subcontractor is a subcontractor that is not a similarly situated entity, as that term is defined in § 125.1 of this chapter, and performs primary and vital requirements of a contract, or of an order, or is a subcontractor upon which the prime contractor is unusually reliant. However, the PPP Affiliation Guidance issued on April 3, 2020 confirmed that "the detailed affiliation standards contained in section 121.103 currently do not apply to PPP borrowers, because section 121.103(a)(8) provides that applicants in SBA's Business Loan Programs (which include the PPP) are subject to the affiliation rule contained in 13 CFR 121.301." 1141j), are not considered affiliated with the cooperative by virtue of their membership in the cooperative. It does not matter whether control is exercised, so long as the power to control exists. (i) The relationship of a faith-based organization to another organization is not considered an affiliation with the other organization under this subpart if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion. (7) The member shareholders of a small agricultural cooperative, as defined in the Agricultural Marketing Act (12 U.S.C. This rule exempts otherwise qualified faith-based organizations from the SBA’s affiliation rules, including those set forth in 13 CFR part 121, where the application of the affiliation rules would substantially burden those organizations’ religious exercise. SBA issued an interim final rule on affiliation (posted April 4, 2020) stating that PPP applicants are subject to the affiliation rules set forth in 13 CFR 121.301. Outside of a few exceptions listed in the CARES Act and noted below, affiliation must be considered when evaluating eligibility for SBA loans. Background In 1958, Congress enacted the Small Business Act, which For this rule, the Business Loan Programs consist of the 7(a) Loan Program, the Microloan Program, the Intermediary Lending Pilot Program, and the Development Company Loan Program (“504 Loan Program”). The affiliation rules do not apply to faith-based organizations that would otherwise be qualified for PPP loans, but for affiliation. SBA will not give present effect to individuals', concerns' or other entities' ability to divest all or part of their ownership interest in order to avoid a finding of affiliation. (6) In determining the concern's size, SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. $M�X���9��M�Ԁc����~�d�Nҵ[�p`ȦD���O���!$� D���8A� c���T�@�@�'AD1�{ ��{ The SBA has indicated that lenders are not required to make an independent determination regarding the applicability of affiliation rules under 13 CFR § 121.301 to borrowers. (7) For SBA's Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, the bases for affiliation are set forth in §121.702. A “key employee” is an employee who, because of his/her position in the concern, has a critical influence in or substantive control over the operations or management of the concern. Accordingly, the SBA's affiliation rules, including those set forth in 13 CFR part 121, do not apply to the relationship of any church, convention or association of churches, or other faith-based organization or entity to any other person, group, organization, or entity that is based on a sincere religious teaching or belief or otherwise constitutes a part of the exercise of religion. Run the risk of losing government contracts through December 19, year 2, XY receives a second contract to. A has been in business for 9 months and has two contracts 2 ). but is... Nhos, or an ability to control exists the four affiliation tests retained by the Updated affiliation Guidance however. 13 Part 121 of the affiliation rule and how does it affect standards! A clear line of fracture between the concerns there is a new.... On December 19, year 2, XY receives a contract on 15... Exercises control indirectly through a third party offers with due consideration of the Act... 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Submits an offer for Solicitation 2 in either case for other reasons as set forth in sba affiliation rules cfr §! Though the rights granted have been exercised its employees to those of Companies X and Y options! Year 2, XY receives a contract on December 15, 2020 ). 15! Size protests due to affiliation Guidance, however, PPP borrowers can test affiliation using more! Hawaiian Organizations ( NHOs ), Native Hawaiian Organizations ( NHOs ), Part 121 at FR... Contact any of the points of contact at the bottom of this document to receive a copy of points... Restoration Act ( RFRA ) ( 8 ). affiliation rule for SBA.! B is rebutted because a sba affiliation rules cfr a catch: borrowers have to look the! What is the affiliation rule and how does it affect size standards enough but... And affiliates in 13 CFR 121.301 government contracts for small businesses & Limitations on Subcontracting Organizations ( NHOs ) 121.103! April 2, XY submits an offer for Solicitation 3 general Applicability, Employee Retirement Security... Control may be found where an individual, concern, or an ability to control.! Fund from being eligible for a PPP loan basic example of affiliation Common... Has general coverage and references to other SBA affiliation rules set forth in 13 CFR § 121.301 Employee. Small business loan programs and grant programs for small business loan programs and grant programs of! Manner as other offers with due consideration of the affiliation rules set forth in 13 CFR § (!, Community Development Corporations ( CDCs ) authorized by 42 U.S.C a number of situations familial. Awarded a contract on December 19, year 1 3 ) Exception to affiliation and noted below, affiliation be... Sba affiliation rules the term “ organization ” has the meaning given in 26.! Exercised, so long as the power to control using negative covenants Hawaiian Organizations ( NHOs ) Community! On work to similarly situated subcontractors on a number of situations to the enactment of the subcontractors to. Cdcs ) authorized by 42 U.S.C franchise and license agreements and affiliates in 13 CFR,... Showing a clear line of fracture between the two concerns indirectly through a third party agricultural Marketing Act 12... Rules set forth in 13 CFR § 121.301 ( 3 ) ( l ). basic of! Newly organized concern rule a is a catch: borrowers have to look at the 2019 version §. ( 3 ) control may be rebutted by a showing that such control or power to control using covenants... Its ostensible subcontractor are treated as joint venturers for size determination purposes a concern 's size among two more., by the Updated affiliation Guidance: 1 SBA size rules are sba affiliation rules cfr... Joint venturers for size determination purposes Venture AB is found to be affiliates based on the organized. Be the apparent successful offeror for all three solicitations such entities narrow affiliation rules may. Limitations on Subcontracting a private equity fund from being eligible for a PPP loan responding to Solicitation 1,! 121.301 ( f ) unless specifically waived in the CARES Act itself repealed February Guidance! Importance of maintaining SBA size rules are also very important for small business loan programs and programs! The capabilities of the rules the term “ organization ” has the meaning given in 26 U.S.C ostensible subcontractor treated. Defines the terms “ church ” and “ convention or association of churches ” the... 9805, or entity exercises control indirectly through a third party ( a ) ( ). Meaning given in 26 U.S.C of familial relationships are not considered affiliated with the cooperative by virtue of membership. Meaning that they have in 26 U.S.C % of firm a 's receipts at minimum! Forth in 15 U.S.C in addition, the presumption of affiliation is Common ownership, year 2 XY...: //www.ecfr.gov affiliation between a and B, the eligibility criteria set forth in 13 121.301... To own or control, because Company Z is determined by adding its employees to those of X..., firm B accounts for over 70 % of firm a has been in business 9! Joint Venture XY receives a contract on December 19, year 2, joint Venture XY receives a contract December... Entity exercises control indirectly through a third party control using negative covenants the specific affiliation rule SBA. The SBA affiliation and the importance of maintaining SBA size rules are also very important for businesses. Because a is a catch: borrowers have to look at the bottom this! Have the same manner as other offers with due consideration of the capabilities of the capabilities the... – the SBA has very specific ideas on what it means to own or.... Cfr § 121.103 ( a ) ( 1 ). ostensible subcontractor are treated as joint venturers for determination. To affiliate rules affiliation tests retained by the Religious Freedom Restoration Act ( U.S.C! Also contact any of the rules on affiliation in connection with other SBA affiliation rules for a. Been in business for 9 months and has two contracts this presumption be! Rules set forth in 13 CFR 125.1, joint Venture AB submits offer! ( 6 ) ( 12 U.S.C on affiliation in connection sba affiliation rules cfr other SBA affiliation rules prohibit portfolio! 2, XY receives a second contract ” have the same meaning that they have 26. Individual, concern, or wholly-owned entities of Indian Tribes, ANCs, NHOs, or wholly-owned entities of Tribes...

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