Question 1

Can a holding company structure qualify for SDVOSB set-asides?

Accepted Answer

A holding company structure can qualify if each entity in the chain is more than 50% owned by service-disabled veterans. Ownership through intermediate holding companies does not count unless each layer is majority veteran-owned. SBA looks through the corporate structure to determine ultimate ownership and control. Complex multi-layer structures require careful legal analysis before seeking certification.

Question 2

What ownership percentage is required for SDVOSB status?

Accepted Answer

At least 51% of the business must be unconditionally owned by one or more service-disabled veterans. Ownership must be direct — ownership through an intervening entity generally does not count unless each layer of the structure is also more than 50% owned by service-disabled veterans. The 51% threshold applies to all economic interests including profits, losses, and liquidation rights.

Question 3

Can an SDVOSB be owned through a trust?

Accepted Answer

Ownership through a revocable living trust may qualify if the service-disabled veteran is the sole beneficiary and retains full control of the trust. Irrevocable trusts or trusts with non-veteran beneficiaries typically will not qualify. SBA examines the economic substance of the ownership structure, not just the legal form. Any trust arrangement should be reviewed carefully before certifying.

Question 4

How does affiliation affect size standard calculations?

Accepted Answer

Affiliated businesses' revenues and employees are combined when determining size. Affiliation exists when one entity controls or has the power to control another, through common ownership, management, stock options, contractual relationships, or economic dependence. SBA's affiliation rules are complex — common triggers include family members owning related businesses, identical or near-identical owners, and the ostensible subcontractor rule for subcontracting relationships.

Can a holding company structure qualify for SDVOSB set-asides?

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