sba affiliate eligibility form c

Businesses that receive financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 793 0 obj <> endobj Franchises assigned a franchiser identifier code. The SBA’s Frequently Asked Questions (FAQs) document expressly states that the U.S. government will not challenge lender PPP actions that conform to this guidance, and to the PPP Interim Final Rule and any subsequent rulemaking in effect at the time. Size Appeal of: Dhs Sys. Do not send any information that you would have treated confidentially. The Small Business Administration (SBA) issued a second interim final rule (IFR) to clarify application of the affiliate rules to the SBA's Paycheck Protection Program (PPP) created under Title 1 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. If no individual, concern or entity is found to control, SBA will deem the board of directors, president or chief executive officer (CEO) (or other officers, managing members or partners who control the management of the concern) to be in control of the concern. 13 C.F.R. The SBA estimates that 3.57 million PPP borrowers, comprising roughly $62 billion of PPP funds, will be eligible to use Form 3058S — based on an SBA PPP loan report, this … These new nine-page forms require completion by each borrower (or each non-profit borrower, as the case may be) that, together with its affiliates (applying the SBA's affiliation rules applicable to the PPP), received a PPP … If a minority shareholder in a business irrevocably waives or relinquishes any existing rights specified in 13 C.F.R. In addition to required forms that the SBA supplies, you and your business affiliates need to provide financial statements for your business. Powers held by investors which fall under the category of investor protection (such as increasing or decreasing the size of the board, reclassifying interests, or the power to veto unusual or extraordinary actions) do not constitute control of the financial resources of the company, and therefore do not result in a finding of control for purposes of the affiliation rules. Agreements to open or continue negotiations toward the possibility of a merger or a sale of stock at some later date are not considered “agreements in principle” and are thus not given present effect. Section 1102(e) of the CARES Act permanently rescinds an amendment that SBA issued in February. Investment companies registered under the Investment Company Act of 1940, as amended (1940 Act). §121.301(f). The standard SBA employee calculation rule applies to eligibility under the PPP. SBA will deem a minority shareholder to be in control, if that individual or entity 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. Lenders began processing applications on April 3, 2020 and the PPP will run through June 30, 2020. As stated above, SBA determines whether an entity qualifies as a small business concern by counting its receipts, employees, or other measures including those of all its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. 13 C.F.R. In MicroTechnologies, LLC d/b/a MicroTech, SBA No. Consider the following points when analyzing control of a company: For purposes of the PPP, only three express exceptions apply to the SBA’s affiliation standards: Organizations may also need guidance about the applicability of the general affiliation exceptions. Affiliation arises where the CEO or president of the applicant concern (or other officers, managing members or partners who control the management of the concern) also controls the management of one or more other concerns. This exclusion of employees of a former affiliate applies during the entire period of measurement, rather than only for the period after which affiliation ceased. SBA has a specific set of rules that explain when another person, business or entity is considered an affiliate for size purposes. The CARES Act further specifies the SBA regulations that will be used as a baseline to determine eligibility, although the CARES Act has, in some instances, expanded these eligibility … Review Faegre Drinker Biddle & Reath LLP's cookies information for more details. In order to have the full site experience, keep cookies enabled on your web browser. 13 C.F.R. SBA will consider the totality of the circumstances and may find affiliation even though no single factor is sufficient to constitute affiliation. The Faegre Drinker Biddle & Reath LLP website uses cookies to make your browsing experience as useful as possible. : 3245-0348 . §121.301. h�b```������@��(���q����,����������?���2�1�:uTp_f\�@�떆�3�-��JN�t�1�f��pt���j�. The affiliation rules may pose challenges for companies that have venture capital or private equity investors. 13 C.F.R. By browsing our site with cookies enabled, you are agreeing to their use. h�bbd```b``� "�@$3�d���`RD����`v���_"�T@� H�Q�H25O���D However, if a business has sold a segregable division to another business during the applicable period of measurement or before the date on which it self-certified as small, the employees used in determining size status will continue to include the employees of the division that was sold. See 13 C.F.R. The SBA has also issued a GC Letter on PPP and a Frequently Asked Questions document. All other SBIR agencies may award not more than 15% of their SBIR funds to these small businesses. The SBA affiliation rules also create an exception under 13 C.F.R. In determining size, the standard SBA affiliation rules apply, except that the CARES Act waives the 500 employee size limitation for businesses in the food service and hospitality industries, SBA-approved franchises, and businesses that receive financial assistance from Small Business Investment Company (SBIC) funds. LLC, Appellant, SBA No. ���J�a�F1��CC��qX�qe�t8�W'r����� § 121.103(a)(6). To be eligible under this program, entities must have 500 employees or less, or meet the SBA’s industry-based “size standard” requirements for the applicable NAICS code (based either on number of employees or annual receipts). See also information on SBA 8a annual report, SBA form 601 and SBA Form 1450. 121.103(b)(1): “Business concerns owned in whole or substantial part by investment companies licensed, or development companies qualifying, under the Small Business Investment Act of 1958, as amended, are not considered affiliates of such investment companies or development companies.” This exception is in line with the exception in the CARES Act. The SBA also has affiliation rules for its Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. § 121.103; however, the recent SBA guidance clarifies that the detailed affiliation standards contained in section 121.103 of the SBA regulations 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 § 121.301.3 The guidance appears to narrow the scope of the applicable affiliation rules, identifying only four tests based on control that apply to participants in the PPP. See 13 C.F.R. BORROWER INFORMATION FORM For use with all 7(a) Programs The purpose of this form is to collect identifying information about the applicant, loan request, Purpose of this form: The purpose of this form is to collect information about the Small Business Applicant ("Applicant") and its owners, the loan request, existing indebtedness, information about current or previous government financing, and certain other topics. If “False”, complete the Affiliate Eligibility Addendum (Addendum C). Concerns and entities are affiliates of … SBA 504 Loan Program loans offer lower, fixed interest rates and longer, 20-year repayment terms. SBA treats such options, convertible securities and agreements as though the rights granted have been exercised. It does not matter whether the control is exercised, so long as the power to control exists. In your paperwork, you should include a current (dated within 90 days) financial overview statement, as well as financial statements for the past three years. The exception allows the National Institutes of Health (NIH), Department of Energy (DOE) and the National Science Foundation (NSF) to award not more than 25% of their SBIR funds to such small businesses. The SBA continues to issue new guidance on the PPP. § 121.301(f)(3). SBA's affiliation rules confirm whether the … Powers that go beyond what is necessary to protect the interest of minority investors, and provide the ability to exercise veto over the day-to-day operations of the company, are indicative of control. A company can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. If a small business can make a good faith claim that, based on the application of the existing affiliation rules, it meets the CARES Act size standard, it should provide its lender with all relevant information and allow the lender to make the call. Loans issued through the PPP are designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA’s general rule of affiliation is that two businesses will be considered affiliates if one owns or has the ability to control the other. ELIGIBILITY INFORMATION REQUIRED FOR 504 SUBMISSION (PCLP) The P remier Certified . Disclaimer: Transmission of information to us via this feature does not establish an attorney-client relationship. Affiliation arises when there is an identity of interest between close relatives, as defined in 13 CFR 120.10, with identical or substantially identical business or economic interests (such as where the close relatives operate concerns in the same or similar industry in the same geographic area). Fill out the 7(j) Assistance Eligibility Self-Certification Form today to find out if you qualify for the SBA’s 7(j) Management & Technical Assistance Program. What is an “affiliate”? See Size Appeal of: Dhs Sys. �Al�N)���b˂��ځH9O�~잷 �g��N����10120��]:���9� ʹ� Generally, no single venture capital operating company, hedge fund or private equity firm may own more than 50% of the concern unless that single venture capital operating company, hedge fund or private equity firm qualifies as a small business concern that is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States. § 121.104(d) (as updated on January 6, 2019). Program.1 For purposes of the determining the number of employees of an applicant to the Paycheck Protection Program, the applicant is considered together with its affiliates. The SBA sets forth the following rules to determine a business’s number of employees: The SBA’s guidance also suggests that businesses may calculate their average employment over the same time period used to calculate their aggregate payroll costs. The staff then processes, closes, and services the loan. OMB APPROVAL NO. SBA Form 2234 (Part C) (09-16) Previous Editions Obsolete Page 1 of 9 . All rights reserved. The employees of a former affiliate are not counted if affiliation ceased before the date used for determining size. As noted in the summaries above, the SBA has some discretion in determining control. Complete the Affiliate Addendum (Addendum C) Applicant has no possible affiliates. This waiver applies to such entities regardless of the amount of investment from an SBIC and regardless of whether there are also non-SBIC investors. A business will also be eligible as a small business if it meets the SBA’s “alternative size standard” test, which requires that: (1) maximum tangible net worth of the business is not more than $15 million; and (2) the average net income after federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million. The SBA issued additional guidance on the applicability of this loan program and the applicable affiliation rules.2 The CARES Act only references 13 C.F.R. If a business has acquired an affiliate or been acquired as an affiliate during the applicable period of measurement or before the date on which it self-certified as small, the employees counted in determining size status include the employees of the acquired or acquiring business. Affiliation also arises where a single individual, concern or entity controls the management of the applicant concern through a management agreement. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) allows certain eligible companies and individuals to obtain loans of up to $10 million or 2.5 times the average monthly payroll costs over the last year, whichever is less, from the Small Business Administration (“SBA”). �w2��b���L�����53-�d�L�Q��Rnc&. It is a very fact specific, case-by-case inquiry. The CARES Act provides a 500 employee size standard, which a business may use regardless of whether the applicant qualifies as a small business under SBA’s two existing size standards. 632. 13 C.F.R. The rules specify that the average number of employees of a business with affiliates is calculated by adding the average number of employees of the business with the average number of employees of each affiliate. The U.S. Small Business Administration (“SBA”) published an interim final rule on affiliation (the “Affiliation IFR”) a summary of affiliation tests (the “Summary”), a lender application form and agreement, and FAQs, with respect to, the Paycheck Protection Program (the “Program” or “PPP” and such rule, the “Rule”). 0 Expiration Date: 0 4/17/2017 . Following is a summary of the applicable affiliation tests. § 121.301(f)(1). For determining affiliation based on equity ownership, a concern is an affiliate of an individual, concern or entity that owns or has the power to control more than 50% of the concern's voting equity. 748)). Instead, it is the business’s responsibility to determine which entities (if any) are affiliates and determine the total number of combined employees. By submitting personally identifiable information via this form, you are opting-in to use of our first party cookies and accepting our use of your information. Affiliation also arises where a single individual, concern or entity that controls the board of directors or management of one concern also controls the board of directors or management of one of more other concerns. 13 C… Eligibility – Any small business operating in an eligible business allowed by the SBA and most non-profits that do not have available credit elsewhere Qualifications – Good credit history; Can demonstrate the ability to repay the loan; Can prove eligibility from economic loss; Loan $ Amount – up to $2M based upon the size and type of your business However, under the policy directive agencies may issue a certain percentage of their funding awards to small businesses that are majority-owned by multiple venture capital operating companies (VCOCs), hedge funds or private equity funds. 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