If you are awarded a 7(a) loan, the loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business.
Eligible Use of 7(a) Loan Proceeds Include (Non-Exclusive):
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The purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities
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The purchase of equipment, machinery, furniture, fixtures, supplies, or materials
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Long-term working capital, including the payment of accounts payable and/or the purchase of inventory
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Short-term working capital needs, including seasonal financing, contract performance, construction financing and export production
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Financing against existing inventory and receivable under special conditions
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The refinancing of existing business indebtedness that is not already structured with reasonable terms and conditions
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To purchase an existing business
SBA loans cannot be used for these purposes:
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To refinance existing debt where the lender is in a position to sustain a loss and SBA would take over that loss through refinancing
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To effect a partial change of business ownership or a change that will not benefit the business
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To permit the reimbursement of funds owed to any owner, including any equity injection or injection of capital for the business's continuance until the loan supported by SBA is disbursed
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To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow
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For a non-sound business purpose
If you are unsure whether or not your anticipated use of funds is allowed, check with your SBA approved lender.