Business Utilization and Development Memorandum (BUDM)
Clarification Regarding Foreign-owned Businesses
D-7800
ACM-1.10
To: Regional Director, P.N., MP, LC, UC, GP
Attention: PN-3702, PN-3703, MP-825, LC-3103, UC-458, GP-3800
Director, Administrative Service Center
Attention: D-2945
Director, Management Services
Attention: D-7810
From: Ron Simonich
Manager, Business & Economic Development Program
Subject: Business Utilization and Development Memorandum (BUDM) 04-02 - Clarification Regarding Foreign-owned Businesses
We recently received the following clarification from the Small Business Administration (SBA).
Foreign-owned businesses are not automatically large businesses. A foreign-owned business can also be a small business as long as it meets the size standard and 13 CFR 121.105(a) and (b) below:
(a) A business concern eligible for assistance from SBA as a small business is a business entity organized for profit, with a place of business located in the Untied States, and which operates primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials, or labor.
(b) A business concern may be in the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative, except that where the form is a joint venture there can be no more than 49 percent participation by foreign business entities in the joint venture.
So, as you can see, if you are doing business with a company that is foreign owned but has a place of business located in the United States, and which operates primarily within the United States, or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor, it can qualify as a small business as long as it meets the other small business requirements (i.e., the size standard and be organized for profit).
Should you have any questions on this subject, please contact me at (303) 445-2447.