Section 481.25.6. Family-owned business.

Businesses which are owned and operated by one or more members of the same family will be closely scrutinized to determine whether the targeted group person identified as the owner of 51 percent or more of the business does in fact set policy and make day-today and long-term decisions for the operation and management of the business.

       25.6(1) Any characteristic listed below may be cause to deny targeted small business status. This list is not to be construed as complete.

        a.           If a nontargeted group person family member:

       (1)             Is chief executive officer or president;

       (2)             Provides the expertise to conduct the business;

       (3)             Transfers ownership to the targeted group person owner for less than fair market value;

       (4)             Receives compensation equal to or greater than the targeted group person owner, not commensurate with their ownership;

       (5)             Provides occupational services for the business for less than fair market value;

       (6)             Possesses powers equal to or greater than the targeted group person owner to direct management and operations.

        b.           If the targeted group person owner:

       (1)             Is represented to those outside the business as not possessing the final authority to direct the operations and management of the business;

       (2)             Cannot document the date upon which the nontargeted group person family member was hired.

        c.           A recent transfer of ownership by a nontargeted group person family member to a targeted group person will be reviewed to determine if the previous owner is still the principal decision maker on policy or actually manages the existing business. Transfers in the past two years are considered recent, and these businesses shall not be certified, unless evidence substantiating the transfer is received and approved.

If any of the above circumstances prevail, the business shall be considered a family-owned business. Nontargeted group person family-owned businesses are not eligible for certification as targeted small businesses in Iowa.

       25.6(2) If a lending institution requires a signature other than the TSB owner’s, another person may sign. When this happens, the owner must have the experience and expertise to own and operate the business. If a nontargeted group person family member has the expertise and has cosigned for business loans, the business is not eligible.