U.S. Small Business Administration (SBA) issued an interim final rule with additional guidance regarding the application of certain affiliate rules applicable to SBA’s implementation of the “size rules” of the Act and requests public comment. The new guidance effectively reiterates the “control” standards previously communicated including, but not limited to:
- A holder of more than 50% of an applicant’s voting securities de facto “controls” the applicant;
- A minority holder (a holder of less than 50% of an applicant’s voting securities, but in any amount), will be deemed an affiliate if that minority holder can “control” the applicant (by charter, bylaws or stockholder agreement) by preventing a quorum or otherwise blocking actions by the board or stockholders:
If “control” is found between an applicant and another company, all of the applicant’s employees – and employees of all the applicant’s affiliates (including portfolio companies of private equity holders) will be aggregated with the applicant’s employee count in determining eligibility.
More information can be found at the US Treasury PPP Assistance Page.