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Starting Your Business   SBA.gov // Disaster Recovery // Loan Information


USE OF PROCEEDS

7(a) loan proceeds may be used to establish a new business or to assist in the operation, acquisition or expansion of an existing business. These may include (non-exclusive):

  1. To purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities;
  2. To acquire equipment, machinery, furniture, fixtures, supplies, or materials;
  3. For long term working capital including the payment of accounts payable and/or for the purchase of inventory;
  4. To refinance existing business indebtedness which is not already structured with reasonable terms and conditions;
  5. For short term working capital needs including: seasonal financing, contract performance, construction financing, export production, and for financing against existing inventory and receivable under special conditions; or
  6. To purchase an existing business.

INELIGIBLE USE OF PROCEEDS

There are certain restrictions for the use of SBA loans. The following is a list of purposes which SBA loans can not finance:

  1. To refinance existing debt where the lender is in a position to sustain a loss and SBA would take over that loss through refinancing;
  2. To effect a partial change of business ownership or a change that will not benefit the business;
  3. To permit the reimbursements of funds owed to any owner. This includes any equity injection, or injection of capital for the purposes of the businesses continuance until the loan supported by SBA is disbursed;
  4. To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow; and
  5. For a non sound business purpose.


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