§ 120.120. What are eligible uses of proceeds?
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/us/cfr/t13/s§ 120.120·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A small business must use an SBA business loan for sound business purposes.
(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 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).
(c)A Borrower may use 7(a) loan proceeds for refinancing certain outstanding debts. \[61 FR 3235, Jan. 31, 1996, as amended at 77 FR 19533, Apr. 2, 2012; 88 FR 21899, Apr. 12, 2023\]
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§ 120.120
What are eligible uses of proceeds?
Fed. Reg.×2
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