Glossary · The loan itself
Use of Loan Proceeds
In short
This specifies exactly what the SBA loan funds can be spent on. The SBA has strict rules for eligible uses to ensure the money supports small business growth.
What it means in a deal
Your SBA loan can cover business acquisition costs, working capital, inventory, equipment, and real estate. It generally cannot be used for speculative investments or to refinance existing debt unless it meets specific criteria. Your lender will meticulously document every dollar's use in the SBA Loan Authorization.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Use of Loan Proceeds
- Can I use proceeds from selling my primary residence as part of my equity injection?
- Can I use proceeds from the sale of personal crypto assets for my equity injection?
- What are a lender's responsibilities concerning the proper use of 7(a) loan proceeds by the borrower?
- Can I use proceeds from selling personal real estate as part of my SBA 7(a) equity injection?
- How does a lender ensure compliance with the 'use of proceeds' requirements for a 7(a) loan, particularly for working capital?
- What is the lender's responsibility for validating the business purpose and use of proceeds certified on SBA Form 1919?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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