Glossary · The loan itself
Uses of Funds
In short
This is a detailed breakdown of how the proceeds from your SBA loan will be spent. The SBA has strict rules on what these funds can and cannot be used for.
What it means in a deal
Your SBA Loan Authorization will specify the exact 'Uses of Funds,' covering the purchase price, working capital, inventory, equipment, and eligible closing costs. You cannot use SBA loan funds for purposes like paying personal debts, speculative investments, or refinancing existing debt unless specifically allowed. Ensure your proposed uses align precisely with SBA guidelines, as any discrepancy can jeopardize your loan approval.
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 Uses of Funds
- What are the acceptable uses of 'working capital' funds from an SBA 7(a) loan?
- Are marketing and advertising expenses allowed uses for 7(a) loan funds?
- What if the business for sale uses proprietary software or a unique technology?
- What are the specific eligible uses for working capital included in an SBA 7(a) acquisition loan?
- Can an SBA 7(a) loan specifically fund only working capital needs for a new business acquisition, without other uses?
- Can I use funds from a personal line of credit as part of my equity injection?
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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