§120.120. What are eligible uses of proceeds?
13 C.F.R. § 120.120
A small business must use an SBA business loan for sound business purposes.
A Borrower may use loan proceeds from any SBA loan to:
Acquire land (by purchase or lease);
Improve a site (e.g., grading, streets, parking lots, landscaping), including up to 5 percent for community improvements such as curbs and sidewalks;
Purchase one or more existing buildings;
Convert, expand or renovate one or more existing buildings;
Construct one or more new buildings; and/or
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).
A Borrower may also use 7(a) and microloan proceeds for:
Inventory;
Supplies;
Raw materials; and
Working capital (if the Operating Company is a co-borrower with the Eligible Passive Company, part of the loan proceeds may be applied for working capital and/or the purchase of other assets, including intangible assets, for use by the Operating Company).
A Borrower may use 7(a) loan proceeds for refinancing certain outstanding debts.
Notes, amendments, and revision history
Amendments
[61 FR 3235, Jan. 31, 1996, as amended at 77 FR 19533, Apr. 2, 2012; 88 FR 21899, 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
[61 FR 3235, Jan. 31, 1996, as amended at 77 FR 19533, Apr. 2, 2012; 88 FR 21899, Apr. 12, 2023]