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§ 120.130 - Restrictions on uses of proceeds.

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SBA will not authorize nor may a Borrower use loan proceeds for the following purposes (including the replacement of funds used for any such purpose):

Payments, distributions or loans to Associates of the applicant (except for ordinary compensation for services rendered);

Refinancing a debt owed to a Small Business Investment Company (“SBIC”) or a New Markets Venture Capital Company (“NMVCC”);

Floor plan financing or other revolving line of credit, except under § 120.340 or § 120.390;

Investments in real or personal property acquired and held primarily for sale, lease, or investment (except for a loan to an Eligible Passive Company or to a small contractor under § 120.310);

The applicant may not use any of the proceeds to pay past-due Federal, state, or local payroll taxes, sales taxes, or other similar taxes that are required to be collected by the applicant and held in trust on behalf of a Federal, state, or local government entity.

A purpose which does not benefit the small business; or

Any use restricted by §§ 120.201, 120.202, and 120.884 (specific to 7(a) loans and 504 loans respectively).

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§ 120.120 - What are eligible uses of proceeds?
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§ 120.131 - Leasing part of new construction or existing building to another business.