ISSUE 002 - SBA Rulemaking Update: What Changing Definitions of Control Could Mean for Small Businesses

Small Business Policy Brief™

Hello there, Small Business Champions! Welcome to this week's newsletter where we'll be diving into the world of SBA Rulemaking. We know it can seem like a maze, but don't worry, we're here to guide you through it.

SBA rulemaking activity increasingly focuses on refining how “control,” “independence,” and “management authority” are evaluated across small business programs. While statutory eligibility standards remain unchanged, proposed and anticipated regulatory clarifications suggest greater scrutiny of how firms operate in practice—not just on paper.

For small businesses, this signals a shift from form-based compliance to behavioral and operational assessment.

Understanding SBA Rulemaking

Recent SBA rulemaking activity and policy guidance signal:

• Increased attention on actual decision-making authority, not just title or ownership percentage

• Expanded examination of negative control provisions in operating and shareholder agreements

• Greater scrutiny of relationships with former employers, primes, or investors

• Alignment between certification representations and day-to-day operational reality

These developments do not rewrite program rules, but they sharpen how SBA evaluates compliance.

SBA Rulemaking is the process by which the Small Business Administration (SBA) creates and modifies rules that affect small businesses. It's important to understand this process as it directly impacts your business. We encourage you to share your thoughts on this topic and suggest any related topics you'd like us to cover in the future.

Participating in SBA Rulemaking

Did you know you can have a say in SBA Rulemaking? Yes, you can! The SBA encourages public participation in the rulemaking process. We'd love to hear if you've ever participated in this process or if you're considering it. Let's start a conversation!

Who Is Most Affected

This rulemaking direction most directly impacts:

• 8(a) firms approaching graduation or mid-program reviews

• Firms with outside investors, lenders, or complex equity arrangements

• Companies using joint ventures or mentor-protégé structures

• Businesses experiencing rapid growth or leadership transitions

Even compliant firms should assume greater documentation expectations.

Why It Matters

Many small businesses technically meet eligibility thresholds but rely on governance structures that create ambiguity around control.

As SBA clarifies expectations:

• Agreements once considered standard may raise questions

• Informal decision-making patterns may be reinterpreted as control

• Legacy structures may no longer align with enforcement posture

Rulemaking today becomes audit criteria tomorrow.

What to Watch Next

Small businesses should closely monitor:

• Final SBA rulemaking language clarifying control standards

• Updated SBA FAQs and internal guidance to reviewers

• Enforcement patterns emerging from eligibility challenges

• Signals from OHA decisions interpreting control and affiliation

Early awareness enables structural adjustments before compliance becomes contested.

Staying Informed About SBA Rulemaking

Staying informed about SBA Rulemaking is crucial. You can do this by regularly checking the Federal Register and the SBA's website. How do you stay updated? Share your tips and tricks with the community, and let's learn together!

That's all for this week, folks! Remember, we're all in this together. Let's continue to support and learn from each other. Until next time, Miranda Bouldin

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