Affiliation: Affiliation occurs when one company or person has control, or the power to control another. You (the applicant/awardee) must include the employees of its affiliates when determining whether your business has 500 employees or less. If you check one or more of the following, then you or your business may be affiliated with another.
This checklist is intended to serve as a guide only. Please read SBA’s SBIR/STTR size regulations, FAQs, and compliance guide for further information on affiliation to determine whether you or your business have any affiliates.
Note: Even if you are affiliated with another company, you would still be eligible for the SBIR program if your combined employees are 500 or less.
- A business, entity, or individual owns more than 50% of the awardee’s equity, or has the right to own more than 50% via stock options or convertible securities
- A business, entity, or individual owns more than 40% of the awardee’s equity, or has the right to own more than 40% via stock options or convertible securities and the relationship between the concerns/entity/individual, taken as a whole, demonstrates affiliation.
- The awardee has an agreement to merge (or a sale of stock) or an agreement in principle to merge (or a sale of stock) with another company.
- The CEO, President, Managing Partner or Managing Member or other officer that controls the management of the awardee controls the management of one or more other businesses or entities.
- A single board member, entity or business concern that controls the board of the awardee controls the board or management of one or more other businesses or entities.
- The awardee is a joint venture and does not have an approved SBA 8(a) Mentor/Protégé agreement.
- The awardee’s owners or managers have family members with identical or substantially identical business interests (e.g., operate businesses in same or similar industry in same geographic location).
- The awardee depends on another business for 70% or more of its receipts.
- The awardee is usually reliant or will subcontract/subgrant requirements associated with the principal purpose of the project to another and the relationship between the awardee and subcontractor/subgrantee (e.g., percentage of work performed by the subcontractor/subgrantee; subcontractor/subgrantee provides bonding assistance) demonstrates affiliation.
- If a license is involved, the awardee has a license agreement for a product or trademark that does not allow the awardee the right to profit and bear any risk of loss associated with the license.
- The awardee has been actively and continuously operating for less than one year and: (1) its current officers, directors, principal stockholders, managing members, general partners or key employees are former or current officers, directors, principal stockholders, managing members, general partners or key employees of a different company that is in the same or related industry as the awardee; (2) the business furnishes the awardee with contracts, financial or technical assistance, indemnification on bonds, or facilities; and (3) there is no clear line of fracture between the two companies to show that they act separately.
- The minority investor venture capital operating company, hedge fund or private equity firm that is affiliated with the awardee owns a majority interest in a portfolio company or holds a majority of the seats on the board of directors of the portfolio company.
- The totality of circumstances shows a business/entity/individual has the power to control the awardee as a result of business or personal ties or relationships, and no one factor set forth above exists.