Under the 13 CFR 125.1, joint ventures would not be affiliated if they pass on work to similarly situated subcontractors. 13 CFR Parts 120 and 121 Docket Number SBA-2020-0030 RIN 3245-AH44 ... interim final rule on affiliation (posted April 4, 2020) stating that PPP applicants are subject to the affiliation rules set forth in 13 C.F.R. 3 You may also contact any of the points of contact at the bottom of this document to receive a copy of the rules. W9��� SBA affiliation and the importance of maintaining SBA size rules are also very important for small business loan programs and grant programs. Firm A has been in business for 9 months and has two contracts. On March 13, 2020, President Trump declared the ongoing Coronavirus Disease 2019 (COVID-19) pandemic of sufficient severity and magnitude to warrant an emergency declaration for all States, territories, and the District of Columbia. Affiliation Rules: The SBA has issued affiliation rules under the Small Business Act (13 CFR 121.103 and 13 CFR 121.301), which rules generally require aggregation of employees of businesses under common “control,” to determine whether a company meets the applicable size qualifications. That sheet may be identified as addendum A, and no further listing of the other organization or description of the relationship to that organization is required. 414(e)(3)(D). (ii) A business concern owned and controlled by an Indian Tribe, ANC, NHO, CDC, or by a wholly-owned entity of an Indian Tribe, ANC, NHO, or CDC, is not considered to be affiliated with another concern owned by that entity based solely on the contractual relations between the two concerns. Affiliation may arise where former officers, directors, principal stockholders, managing members, or key employees of one concern organize a new concern in the same or related industry or field of operation, and serve as the new concern's officers, directors, principal stockholders, managing members, or key employees, and the one concern is furnishing or will furnish the new concern with contracts, financial or technical assistance, indemnification on bid or performance bonds, and/or other facilities, whether for a fee or otherwise. § 121.103 How does SBA determine affiliation? Affiliation based on franchise and license agreements. 80a-1, et seq. XY is eligible for the contract award because compliance with the three awards in two years rule is determined as of the date of the initial offer including price, XY submitted its offer prior to December 19, year 3, and XY had not received three contract awards prior to its offer on December 15. SBA defines the terms affiliation and affiliates in 13 CFR 121.103, which has general coverage and references to other SBA affiliation rules. in the. The first principle of affiliation is affiliation based on ownership. (4) A contractor and its ostensible subcontractor are treated as joint venturers for size determination purposes. In applying for a loan under the Paycheck Protection Program (PPP), a faith-based organization may make all necessary certifications with respect to common ownership or management or other eligibility criteria based upon affiliation, if the organization would be an eligible borrower but for application of SBA affiliation rules and if the organization falls within the terms of the exemption described in paragraph (b)(10)(i) of this section. Borrowers of PPP loans must apply SBA’s affiliation rules as spelled out in 13 CFR § 121.301(f), which apply to SBA’s 7(a) program and were adopted for the PPP through the CARES Act. SBA defines the terms affiliation and affiliates in 13 CFR 121.103, which has general coverage and references to other SBA affiliation rules. Individuals or firms that have identical or substantially identical business or economic interests (such as family members, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships) may be treated as one party with such interests aggregated. (e) Affiliation based on common management. 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”). On June 10, year 2, XY submits an offer for Solicitation 2. (4) Business concerns which lease employees from concerns primarily engaged in leasing employees to other businesses or which enter into a co-employer arrangement with a Professional Employer Organization (PEO) are not affiliated with the leasing company or PEO solely on the basis of a leasing agreement. 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. [T]he 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 … § 121.301(f)(8). Affiliation based on the newly organized concern rule. (4) Affiliation may be found where an individual, concern, or entity exercises control indirectly through a third party. Exception to affiliation for certain joint ventures. Pursuant to the Updated Affiliation Guidance, however, PPP borrowers can test affiliation using the more narrow affiliation rules of 13 CFR 121.301. SBA affiliation rules require the JV agreement to specify the roles and responsibilities of the SBA joint venture partners, including how the joint venture will comply with the requirement of 13 CFR 124.513 (d) that the 8 (a) BD Participant perform at least 40% of the company’s work. Affiliation based on identity of interest. of. SBA treats such options, convertible securities, and agreements as though the rights granted have been exercised. (3) Control may be affirmative or negative. (2) SBA may presume an identity of interest based upon economic dependence if the concern in question derived 70% or more of its receipts from another concern over the previous three fiscal years. Labor publication ‘‘Area Trends. (1) Firms owned or controlled by married couples, parties to a civil union, parents, children, and siblings are presumed to be affiliated with each other if they conduct business with each other, such as subcontracts or joint ventures or share or provide loans, resources, equipment, locations or employees with one another. A. (2) SBA considers factors such as ownership, management, previous relationships with or ties to another concern, and contractual relationships, in determining whether affiliation exists. 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. 0 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. Therefore, Company Z is deemed to have more than 500 employees, together with … On June 19, year 2, XY receives a second contract responding to Solicitation 1. (3) Business concerns which are part of an SBA approved pool of concerns for a joint program of research and development or for defense production as authorized by the Small Business Act are not affiliates of one another because of the pool. all. (ii) Business concerns owned and controlled by Indian Tribes, ANCs, NHOs, CDCs, or wholly-owned entities of Indian Tribes, ANCs, NHOs, or CDCs, are not considered to be affiliated with other concerns owned by these entities because of their common ownership or common management. Affiliation based on 50 percent or more equity ownership, or an ability to control using negative covenants. (a) Special rules for ANCs. 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