SBA Guidance on Affiliation and Nonmanufacturer Rule

SBA Guidance on Affiliation

Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Control may arise through ownership, management, or other relationships or interactions between the parties.

Control may be affirmative or negative. Negative control includes 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.

Small Business Administration Non-manufacturer Rule[1]

(b) Nonmanufacturers.
(1) A firm may qualify as a small business concern for a requirement to provide manufactured products or other supply items as a nonmanufacturer if it:
(i) Does not exceed 500 employees;
(ii) Is primarily engaged in the retail or wholesale trade and normally sells the type of item being supplied;
(iii) Takes ownership or possession of the item(s) with its personnel, equipment or facilities in a manner consistent with industry practice;

[1] https://www.law.cornell.edu/cfr/text/13/121.406