# 13 CFR § 126.204: May a HUBZone small business concern have affiliates? > Federal · Regulations · In force URL: https://www.frixlaw.com/law-library/statutes/ecfr-13-126.204 ## Section - **Citation:** 13 CFR § 126.204 - **Heading:** May a HUBZone small business concern have affiliates? - **Jurisdiction:** Federal - **Kind:** Regulations - **Status:** In force - **Text as of:** September 22, 2026 - **Source:** Publisher's official text - **Location:** Title 13—Business Credit and Assistance > CHAPTER I—SMALL BUSINESS ADMINISTRATION > PART 126—HUBZONE PROGRAM > Subpart B—Requirements To Be a Certified HUBZone Small Business Concern ## Text (a) A HUBZone small business concern may have affiliates, provided that the HUBZone small business concern, together with its affiliates, qualifies as a small business concern as defined in part 121 of this chapter under the size standard corresponding to any NAICS code listed in its profile in SAM (or successor system), except as otherwise provided for small agricultural cooperatives.gov in § 126.103. (b) Employees of affiliates are not automatically considered employees of a HUBZone applicant or HUBZone small business concern solely on the basis of affiliation. (c) The employees of an affiliate may be counted as employees of a HUBZone applicant or HUBZone small business concern for purposes of determining compliance with the HUBZone program's principal office and 35% residency requirements in certain circumstances. In determining whether individuals should be counted as employees of a HUBZone applicant or HUBZone small business concern, SBA will consider the totality of circumstances, including criteria used by the IRS for Federal income tax purposes and those set forth in SBA's Size Policy Statement No. 1. Employees of the concern's affiliate will not be counted as the concern's employees if there is a clear line of fracture between the concern and its affiliate. (1) SBA generally will find that there is a clear line of fracture where the concern demonstrates that it does not share employees, facilities, or equipment with the affiliate; has different customers or lines of business (or is distinctly segregated geographically); and does not receive significant contracts or financial assistance from the affiliate. (2) The use of common administrative services between parent and/or sister concerns by itself will not result in an affiliate's employees being counted as employees of the HUBZone applicant or HUBZone small business concern. (3) Minimal business activity between the concern and its affiliate alone will not result in an affiliate's employees being counted as employees of the HUBZone applicant or HUBZone small business concern. (4) SBA will not treat the employees of one company as employees of another for HUBZone program purposes if the two firms would not be considered affiliated for size purposes under Part 121 of this chapter. Example 1 to paragraph (c):X owns 100% of Company A and 51% of Company B. Based on X's common ownership of A and B, the two companies are affiliated under SBA's size regulations. SBA will look at the totality of circumstances to determine whether it would be reasonable to treat the employees of B as employees of A for HUBZone program purposes. If both companies do construction work and share office space and equipment, then SBA would find that there is not a clear line of fracture between the two concerns and would treat the employees of B as employees of A for HUBZone program purposes. In order to be eligible for the HUBZone program, at least 35% of the combined employees of A and B must reside in a HUBZone. [84 FR 65243, Nov. 26, 2019, as amended at 89 FR 102499, Dec. 17, 2024] ## Nearby sections - [13 CFR § 126.100 § 126.100 What is the purpose of the HUBZone program?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.100.md) - [13 CFR § 126.101 § 126.101 Which government departments or agencies are affected directly by the HUBZone program?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.101.md) - [13 CFR § 126.102 § 126.102 What is the effect of the HUBZone program on the section 8(d) subcontracting program?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.102.md) - [13 CFR § 126.103 § 126.103 What definitions are important in the HUBZone program?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.103.md) - [13 CFR § 126.104 § 126.104 How can a Governor petition for the designation of a Governor-designated cover area?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.104.md) - [13 CFR § 126.105 § 126.105 How often will the HUBZone Map be updated?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.105.md) - [13 CFR § 126.200 § 126.200 What requirements must a concern meet to be eligible as a certified HUBZone small business concern?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.200.md) - [13 CFR § 126.201 § 126.201 Who does SBA consider to be an owner of a HUBZone small business concern?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.201.md) - [13 CFR § 126.202 § 126.202 Who does SBA consider to control a HUBZone small business concern?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.202.md) - [13 CFR § 126.204 § 126.204 May a HUBZone small business concern have affiliates?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.204.md) - [13 CFR § 126.205 § 126.205 May participants in other SBA programs be certified as HUBZone small business concerns?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.205.md) - [13 CFR § 126.206 § 126.206 May nonmanufacturers be certified as HUBZone small business concerns?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.206.md) - [13 CFR § 126.207 § 126.207 Do all of the offices or facilities of a certified HUBZone small business concern have to be located in a HUBZone?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.207.md) - [13 CFR § 126.300 § 126.300 How may a concern be certified as a HUBZone small business concern?](https://www.frixlaw.com/law-library/statutes/ecfr-13-126.300.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/ecfr-13-126.204. Check the current official text before relying on it. Not legal advice.