[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR121.301]

[Page 314-315]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 121--SMALL BUSINESS SIZE REGULATIONS--Table of Contents
 
          Subpart A--Size Eligibility Provisions and Standards
 
Sec. 121.301  What size standards are applicable to financial assistance programs?

    (a) For Business Loans and Disaster Loans (other than physical 
disaster loans), an applicant business concern, including its 
affiliates, must not exceed the size standard for the industry in which 
the applicant is primarily engaged.
    (b) For Development Company programs, an applicant must meet one of 
the following standards:

[[Page 315]]

    (1) The same standards applicable under paragraph (a) of this 
section; or
    (2) Including its affiliates, tangible net worth not in excess of $7 
million, and average net income after Federal income taxes (excluding 
any carry-over losses) for the preceding two completed fiscal years not 
in excess of $2.5 million. If the applicant is not required by law to 
pay Federal income taxes at the enterprise level, but is required to 
pass income through to its shareholders, partners, beneficiaries, or 
other equitable owners, the applicant's ``net income after Federal 
income taxes'' will be its net income reduced by an amount computed as 
follows:
    (i) If the applicant is not required by law to pay State (and local, 
if any) income taxes at the enterprise level, multiply its net income by 
the marginal State income tax rate (or by the combined State and local 
income tax rates, as applicable) that would have applied if it were a 
taxable corporation.
    (ii) Multiply the applicant's net income, less any deduction for 
State and local income taxes calculated under paragraph (b)(2)(i) of 
this section, by the marginal Federal income tax rate that would have 
applied if the applicant were a taxable corporation.
    (iii) Sum the results obtained in paragraphs (b)(2)(i) and 
(b)(2)(ii) of this section.
    (c) For the Small Business Investment Company (SBIC) program, an 
applicant must meet one of the following standards:
    (1) The same standards applicable under paragraph (a) of this 
section; or
    (2) Including its affiliates, tangible net worth not in excess of 
$18 million, and average net income after Federal income taxes 
(excluding any carry-over losses) for the preceding two completed fiscal 
years not in excess of $6 million. If the applicant is not required by 
law to pay Federal income taxes at the enterprise level, but is required 
to pass income through to its shareholders, partners, beneficiaries, or 
other equitable owners, the applicant's ``net income after Federal 
income taxes'' will be its net income reduced by an amount computed as 
follows:
    (i) If the applicant is not required by law to pay State (and local, 
if any) income taxes at the enterprise level, multiply its net income by 
the marginal State income tax rate (or by the combined State and local 
income tax rates, as applicable) that would have applied if it were a 
taxable corporation.
    (ii) Multiply the applicant's net income, less any deduction for 
State and local income taxes calculated under paragraph (c)(2)(i) of 
this section, by the marginal Federal income tax rate that would have 
applied if the applicant were a taxable corporation.
    (iii) Add the results obtained in paragraphs (c)(2)(i) and 
(c)(2)(ii) of this section.
    (d) For Surety Bond Guarantee assistance--
    (1) Any construction (general or special trade) concern or concern 
performing a contract for services is small if, together with its 
affiliates, its average annual receipts does not exceed $6.0 million.
    (2) Any concern not specified in paragraph (d)(1) of this section 
must meet the size standard for the primary industry in which it, 
combined with its affiliates, is engaged.
    (e) The applicable size standards for purposes of SBA's financial 
assistance programs, excluding the Surety Bond Guarantee assistance 
program, are increased by 25% whenever the applicant agrees to use all 
of the financial assistance within a labor surplus area. Labor surplus 
areas are listed monthly in the Department of Labor publication ``Area 
Trends in Employment and Unemployment.''

[61 FR 3286, Jan. 31, 1996, as amended at 66 FR 30648, June 7, 2001; 67 
FR 3056, Jan. 23, 2002; 69 FR 29204, May 21, 2004]