When it comes to the SBA affiliation rules, it’s a good idea to keep Steve Urkel in mind. Why remember this lovable suspender-wearing nerd? Well, because in the SBA affiliation world, “family matters.”
Okay, bad joke. But hold the rotten tomatoes, because I have a point here. In my experience, one of the most common ways small businesses find themselves with an SBA affiliation problem is through family relationships. Many small government contractors are surprised to learn that the SBA presumes that firms controlled by close family members are affiliated due to a supposed “identity of interest” between the family members. For example, if you control Company A and your spouse controls Company B, the two firms are presumed affiliated for SBA size purposes, and you must rebut the presumption (not an easy task) to avoid affiliation.
In some prior size appeal cases, the SBA Office of Hearings and Appeals held that two firms controlled by family members could not rebut the presumption if the companies had any business dealings whatsoever. However, in a commonsense decision—albeit one creating a bit of a gray area—SBA OHA recently held that two companies controlled by family members are not necessarily affiliated just because they have minor business relations.