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§ 120.884 - Ineligible costs for 504 loans.

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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).

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§ 120.883 - Eligible administrative costs for 504 loans.
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§ 120.890 - Source of interim financing.