---
kind: "section"
citation: "13 C.F.R. § 120.820"
title: "13"
number: "120.820"
heading: "CDC Affiliation."
url: "https://uscodex.org/cfr/13/120.820"
---

# §120.820. CDC Affiliation.

- (a) A CDC must be independent and must not be affiliated (as determined in accordance with [§ 121.103](/cfr/13/121.103.md) of this chapter) with any Person (as defined in [§ 120.10](/cfr/13/120.10.md)) except as permitted under this section.
- (b) A CDC may be affiliated with an entity (other than a 7(a) Lender or another CDC) whose function is economic development in the same Area of Operations and that is either a non-profit entity or a State or local government or political subdivision (e.g., council of governments).
- (c) A CDC must not be affiliated (as determined in accordance with [§ 121.103](/cfr/13/121.103.md)) with or invest, directly or indirectly, in a 7(a) Lender. A CDC that was affiliated with a 7(a) Lender as of November 6, 2003 may continue such affiliation.
- (d) A CDC must not be affiliated (as determined in accordance with [§ 121.103](/cfr/13/121.103.md) of this chapter) with another CDC. In addition, a CDC must not directly or indirectly invest in or finance another CDC, except with the prior written approval of D/FA or designee and D/OCRM or designee if they determine in their discretion that such approval is in the best interests of the 504 Loan Program.
- (e) A CDC may remain affiliated with a for-profit entity (other than a 7(a) Lender) if such affiliation existed prior to March 21, 2014. A CDC may also be affiliated with a for-profit entity (other than a 7(a) Lender) whose function is economic development in the same Area of Operations with the prior written approval of the D/FA or designee if he or she determines in his or her discretion that such approval is in the best interests of the 504 Loan Program.
- (f) A CDC must not directly or indirectly invest in a Licensee (as defined in [§ 107.50](/cfr/13/107.50.md) of this chapter) licensed by SBA under the SBIC program authorized in Part A of Title III of the Small Business Investment Act, [15 U.S.C. 681](/usc/15/681.md) et seq. A CDC that has an SBA-approved investment in a Licensee as of November 6, 2003 may retain such investment.
- (g) Notwithstanding paragraphs [(b)](#b), [(c)](#c), and [(e)](#e) of this section, a CDC may be affiliated with a Community Advantage SBLC. Additionally, CDCs that are also Community Advantage Pilot Program Lenders as of May 11, 2023 may be licensed as Community Advantage SBLCs.

## Notes

### Amendments

[79 FR 15649, Mar. 21, 2014, as amended at 88 FR 21900, Apr. 12, 2023]

### Authority

Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and note, 636(a), (h) and (m), 650, 687(f), 696(3) and (7), and 697(a) and (e); sec. 521, Pub. L. 114-113, 129 Stat. 2242; sec. 328(a), Pub. L. 116-260, 134 Stat. 1182.

### Source

Source: 61 FR 3235, Jan. 31, 1996, unless otherwise noted.

### Amendments

[79 FR 15649, Mar. 21, 2014, as amended at 88 FR 21900, Apr. 12, 2023]