Affiliate / K1
What SBA means by “affiliate,” why it matters, and how to submit only the docs that apply to your situation.
WHY
The SBA needs to know if you own other businesses that could affect your loan. This helps them:
✅ Confirm your eligibility
✅ Calculate combined cash flow if required
✅ Avoid duplication across loans
Affiliates aren’t a red flag—but missing this step is the #1 delay in approvals. When in doubt, list everything and we’ll help clarify.
WHAT
📝 Addendum A – Required for every business you’re affiliated with
This form lists any business you own or are connected to—regardless of industry or ownership level. You’ll list:
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Any company shown on your Schedule E
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Any business where you own part of the company
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Any entity that shares your ownership—even if it’s closed
✅ Everyone needs to fill this out—even if none of the businesses turn out to be true “affiliates.”
|
If You… |
Then Upload… |
|---|---|
|
Own over 50% of another business and it operates in the same 2-digit NAICS industry |
✅ 2 years of business tax returns for that company |
|
Own exactly 50% |
✅ Schedule K-1 only (no tax return required) |
|
Own less than 50% |
✅ Schedule K-1 from your personal tax return |
|
Don’t own it |
✅ Reply confirming that and we’ll note it for the bank |
📌 The SBA groups businesses by the first 2 digits of their NAICS code (industry classification). If your other business operates in a different industry, you likely won’t need tax returns.
HOW
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Download and fill out Addendum A for all businesses you’re connected to
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Check your Schedule E for any additional entities that need to be listed
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Upload the right docs based on the table above
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If you’re unsure about an industry match, we’ll look up the NAICS codes with you
FAQ – Affiliate Documentation
Q: What if I don’t think the other business is relevant?
A: That’s okay—we still need to list it. We’ll help determine if it qualifies as a “true affiliate.”
Q: What if I can’t get the tax return for another company I own?
A: Let us know. If you own under 50%, a K-1 may be enough. If you’re over 50%, we’ll help you request what’s needed.
Q: What if the other company is in a different industry?
A: Still list it on Addendum A. If the NAICS code is different, the bank likely won’t need the full tax return.
Q: What if the company is closed or never made money?
A: Just include that note on Addendum A—we still need to list it, but no tax returns are required for closed or inactive companies.