Section 120.120 - What are eligible uses of proceeds?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:(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