Section 120.352 - Use of proceedsLoan proceeds may be used for:
(a)Qualified employee trust. A qualified employee trust may use loan proceeds for two purposes:(1)Qualified employer securities. A qualified employee trust may relend loan proceeds to the employer by purchasing qualified employer securities. The small business concern may use these funds for any general 7(a) purpose.(2)Control of employer. A qualified employee trust may use loan proceeds to purchase a controlling interest (51 percent) in the employer. Ownership and control must vest in the trust by the time the loan is repaid.(b)Small business concern. A small business concern may only use loan proceeds to make a loan to a qualified employee trust that results in the qualified employee trust owning at least 51 percent of the small business concern.87 FR 38908, June 30, 2022 85 FR 7648, 3/11/2020; 85 FR 80588, 3/27/2020; 87 FR 38908, 8/1/2022