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How does SBA define the term "principal office?"

Answer: 

"It’s the location where the greatest number of employees at any one location actually perform their work, except for construction and service industries, which have exemptions based on their occasional need to assign employees at the contract location.
NOTE:
Although service and construction industry firms may exclude employees that are working at job sites (when determining principal office only) this waiver does not pardon those firms from having to meet the statutory requirement of having a Principal Office in a HUBZone. All HUBZone firms must have a principal office that at least one or more employees perform the greatest amount of their work, regardless of the firm’s industry. Therefore, at a minimum, at least one employee must perform the greatest amount of their work at that HUBZone office location. Also note that regardless of the firms industry, each firm must include all employees in the 35% residency calculation.
EXAMPLE 1:
A firm has an office located in a HUBZone with 3 employees working at that location and also has a contract site where 75 employees work. The firm would only count the 3 employees that work at the office when determining principal office. (However, the firm would include all 78 employees when calculating the 35% residency requirement). In this example, the firm meets the principal office requirements because the greatest number of employees (3) (excluding the employees at jobsites (75)) perform their work at the HUBZone location.
EXAMPLE 2:
A firm has an office located in a HUBZone but all employees, including the owner/proprietor, work at jobsite locations fulfilling contractual obligations. In addition, no administrative tasks such as writing proposals, generating payroll, etc. are performed by the owner/proprietor at the office. In this example, the firm would not meet the principal office requirement because the firm does not have any employees performing their work at the HUBZone location.
EXAMPLE 3:
A firm has an office located in a HUBZone and the owner/proprietor and the staff (9 including the owner/proprietor) perform work at jobsites fulfilling specific contract obligations. However, the owner/proprietor also conducts administrative tasks such as writing proposals, generating payroll, responding to emails, etc. while in the office. SBA will consider the time spent performing administrative work in the office as performance of the greatest amount of work by the owner/proprietor. Therefore, the firm would have 1 employee that performs the greatest amount of work in that office. In this example, the firm would meet the principal office requirement because the administrative work performed in the office would be considered when determining Principal Office."
 

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