---
kind: "section"
citation: "13 C.F.R. § 120.352"
title: "13"
number: "120.352"
heading: "Use of proceeds."
url: "https://uscodex.org/cfr/13/120.352"
---

# §120.352. Use of proceeds.


Loan proceeds may be used for:

- (a) **Qualified employee trust.** A qualified employee trust may use loan proceeds for two purposes:
  - (1) **Qualified employer securities.** A qualified employee trust may relend loan proceeds to the employer by purchasing qualified employer securities. The small business concern may use these funds for any general 7(a) purpose.
  - (2) **Control of employer.** A qualified employee trust may use loan proceeds to purchase a controlling interest (51 percent) in the employer. Ownership and control must vest in the trust by the time the loan is repaid.
- (b) **Small business concern.** A small business concern may only use loan proceeds to make a loan to a qualified employee trust that results in the qualified employee trust owning at least 51 percent of the small business concern.

## Notes

### Amendments

[87 FR 38908, June 30, 2022]

### 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

[87 FR 38908, June 30, 2022]