[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR121.301]

[Page 333-334]
 
                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 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 do not exceed $6.5

[[Page 334]]

million, except as provided in Sec. 121.301(d)(3).
    (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, a construction (general or 
special trade) concern or concern performing a contract for services is 
small if, together with its affiliates, 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; 71 FR 62208, Oct. 24, 2006]