Use of 7(a) Loan Proceeds

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Use of 7(a) Loan Proceeds

You can use the loan proceeds to help finance a large variety of business purposes. However, there are a few restrictions. For example, proceeds can’t be used to buy an asset to hold for its potential increased value or to reimburse an owner for the money they previously put into their business.

Basic uses for 7(a) loan proceeds include:

  • To provide long-term working capital to use to pay operational expenses, accounts payable and/or to purchase inventory
  • Short-term working capital needs, including seasonal financing, contract performance, construction financing and exporting
  • To purchase equipment, machinery, furniture, fixtures, supplies or materials
  • To purchase real estate, including land and buildings
  • To construct a new building or renovate an existing building
  • To establish a new business or assist in the acquisition, operation or expansion of an existing business
  • To refinance existing business debt, under certain conditions

SBA loans cannot be used for these purposes:

  • To refinance existing debt where the lender is in a position to sustain a loss and SBA would take over that loss through refinancing
  • To affect a partial change of business ownership or a change that will not benefit the business
  • To permit the reimbursement of funds owed to any owner, including any equity injection or injection of capital to continue the business until the SBA-backed loan is disbursed
  • To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow
  • For a purpose that is not considered to be a sound business purpose as determined by SBA

Tarzana Branch

19538 Ventura Blvd.
Tarzana, CA 91356
(818) 992-5661
Fax: (818) 992-5669

Monterey Park Branch

2323 S. Atlantic Blvd.
Monterey Park, CA 91754
(323) 268-6100
Fax: (323) 265-0342

Claremont Branch

390 W. Foothill Blvd.
Claremont, CA 91711
(909) 625-7891
Fax: (909) 621-2512

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Our Branches and Customer Service will be closing at 12pm PDT on Friday, March 29th in observance of Good Friday.

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