Glossary · The loan itself
Use of proceeds
In short
This details exactly how the money from your SBA loan will be spent. The SBA has strict rules on what the loan funds can and cannot be used for in an acquisition.
What it means in a deal
Your lender will specify the use of proceeds in the SBA Loan Authorization, covering items like the business purchase price, working capital, inventory, and eligible closing costs. You cannot use the funds for non-business purposes, risky investments, or to refinance ineligible debt. Any deviation can jeopardize your loan.
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 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?
- What is the lender's responsibility for validating the business purpose and use of proceeds certified on SBA Form 1919?
- How does a lender ensure compliance with the 'use of proceeds' requirements for a 7(a) loan, particularly for working capital?
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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