[Code of Federal Regulations]

[Title 13, Volume 1]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 13CFR121.301]



[Page 319-320]

 

                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 must satisfy two 

criteria:

    (1) The size of the applicant alone (without affiliates) must not 

exceed the size standard designated for the industry in which the 

applicant is primarily engaged; and

    (2) The size of the applicant combined with its affiliates must not 

exceed the size standard designated for either the primary industry of 

the applicant alone or the primary industry of the applicant and its 

affiliates, whichever is higher. These size standards are set forth in 

Sec. 121.201.

    (b) For Development Company programs, 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 

$7.5 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



[[Page 320]]



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 $6.5 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.

    (3) For any contract or subcontract, public or private, to be 

performed in the Presidentially-declared disaster areas resulting from 

the 2005 Hurricanes Katrina, Rita, or Wilma, the construction (general 

or special trade) concern or concern performing a contract for services 

is small if it meets the size standard for the primary industry in which 

it, together with its affiliates, is engaged, or if it meets the size 

standard set forth in paragraph (d)(1), whichever is higher.

    (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; 70 FR 69047, 69052, 

Nov. 14, 2005; 70 FR 72594, Dec. 6, 2005]