---
kind: "section"
citation: "13 C.F.R. § 120.394"
title: "13"
number: "120.394"
heading: "What are the eligible uses of proceeds?"
url: "https://uscodex.org/cfr/13/120.394"
---

# §120.394. What are the eligible uses of proceeds?


A Borrower must use the loan proceeds solely to acquire, construct or substantially rehabilitate an individual residential or commercial building for sale. “Substantial” means rehabilitation expenses of more than one-third of the purchase price or fair market value at the time of the application. A Borrower may use up to 33 percent of the proceeds to acquire land, and up to 5 percent for community improvements such as curbs and sidewalks.


## Notes

### Amendments

[61 FR 3235, Jan. 31, 1996, as amended at 82 FR 39503, Aug. 21, 2017]

### 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 82 FR 39503, Aug. 21, 2017]