§120.884. Ineligible costs for 504 loans.
13 C.F.R. § 120.884
Costs not directly attributable and necessary for the Project may not be paid with proceeds of the 504 loan. These include, but are not limited to, the following:
Debt refinancing (other than interim financing), except as provided in § 120.882(e) and (g).
A CDC may not use 504 loan proceeds to pay any creditor in a position to sustain a loss causing a shift to SBA of all or part of a potential loss from an existing debt.
Third-Party Loan fees (commitment, broker, finders, origination, processing fees of permanent financing).
Ancillary business expenses, such as—
Working capital;
Counseling or management services fees;
Incorporation/organization costs;
Franchise fees; and
Advertising.
Fixed-asset Project components, such as—
Short-term equipment, furniture, and furnishings (unless essential to and a minor portion of the Project);
Automobiles, trucks, and airplanes; and
Construction equipment (except for heavy duty construction equipment integral to the business' operations with a remaining useful life of a minimum of 10 years).
Notes, amendments, and revision history
Amendments
[61 FR 3235, Jan. 31, 1996, as amended at 64 FR 2118, Jan. 13, 1999; 74 FR 29591, June 23, 2009; 76 FR 9219, Feb. 17, 2011; 82 FR 39504, 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 64 FR 2118, Jan. 13, 1999; 74 FR 29591, June 23, 2009; 76 FR 9219, Feb. 17, 2011; 82 FR 39504, Aug. 21, 2017]