Small Businesses that may be ineligible for financing.

CFR · 2024-01-01 · US · Title 13

(a) (1) (2) (ii) (b) (1) (i) It is not engaged in a regular and continuous business operation (for purposes of this paragraph (b), the mere receipt of payments such as dividends, rents, lease payments, or royalties is not considered a regular and continuous business operation); or (ii) Its employees are not carrying on the majority of day to day operations, and the company does not provide effective control and supervision, on a day to day basis, over persons employed under contract; or (iii) It passes through substantially all of the proceeds of the Financing to another entity. (2) (i) Directly owns, or will own as a result of the Financing, at least 50 percent of the outstanding voting securities; or (ii) Indirectly owns, or will own as a result of the Financing, at least 50 percent of the outstanding voting securities (by directly owning the outstanding voting securities of another passive Small Business that is the direct owner of the outstanding voting securities of the subsidiary company). (3) (i) Directly to one or more eligible non-passive Small Businesses; or (ii) Directly to a passive Small Business that passes substantially all the proceeds directly to (or uses substantially all the proceeds to acquire) one or more eligible non-passive Small Businesses in which the passive Small Business directly owns, or will own as a result of the Financing, at least 50% of the outstanding voting securities. (4) (i) For the purposes of this paragraph (b), “substantially all” mean

official document · source cfr-2024 · id 13:§ 107.720