A small business must use an SBA business loan for sound business purposes. The uses of proceeds are prescribed in each loan's Authorization.
A Borrower may use loan proceeds from any SBA loan to:
Acquire land (by purchase or lease);
Improve a site (e.g., grading, streets, parking lots, landscaping), including up to 5 percent for community improvements such as curbs and sidewalks;
Purchase one or more existing buildings;
Convert, expand or renovate one or more existing buildings;
Construct one or more new buildings; and/or
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).
A Borrower may also use 7(a) and microloan proceeds for:
Inventory;
Supplies;
Raw materials; and
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).
A Borrower may use 7(a) loan proceeds for refinancing certain outstanding debts.
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