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Title 13: Business Credit and Assistance
CHAPTER I: SMALL BUSINESS ADMINISTRATION
PART 120: BUSINESS LOANS
Subpart A: Policies Applying to All Business Loans
: Uses of Proceeds
120.120 - What are eligible uses of proceeds
A small business must use an SBA business loan for sound business purposes. The uses of proceeds are prescribed in each loan's Authorization.
(a) A Borrower may use loan proceeds from any SBA loan to:
(1) Acquire land (by purchase or lease);
(2) Improve a site (e.g., grading, streets, parking lots, landscaping), including up to 5 percent for community improvements such as curbs and sidewalks;
(3) Purchase one or more existing buildings;
(4) Convert, expand or renovate one or more existing buildings;
(5) Construct one or more new buildings; and/or
(6) Acquire (by purchase or lease) and install fixed assets (for a 504 loan, these assets must have a useful life of at least 10 years and be at a fixed location, although short-term financing for equipment, furniture, and furnishings may be permitted where essential to and a minor portion of the 504 Project).
(b) A Borrower may also use 7(a) and microloan proceeds for:
(1) Inventory;
(2) Supplies;
(3) Raw materials; and
(4) Working capital (if the Operating Company is a co-Borrower with an Eligible Passive Company, part of the loan proceeds may be applied for working capital if used for that purpose only by the Operating Company).
(c) A Borrower may use 7(a) loan proceeds for refinancing certain outstanding debts.
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