§ 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: (1) Inventory; (2) Supplies; (3) Raw materials; and (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.