How are profits split in an SDVOSB joint venture?
Profit sharing in a JV is negotiated between the members and documented in the JV agreement. There is no regulatory requirement that profits be split proportional to ownership or work-share. However, the profit allocation must reflect a genuine business arrangement — a token profit to the SDVOSB managing venturer while the large business partner takes the majority may raise questions about control. SBA examines profit arrangements in program examinations.
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