# Can an SBA loan fund another business I own?

**Short answer:** No. SOP 50 10 8.1, Sec. A, Ch. 3, Para. B.9 bars any purpose that does not benefit the small business, including a loan to an applicant for the benefit of an affiliated business. 13 CFR 120.130(f) is the regulation.

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Last checked: 2026-11-08

No. Proceeds must benefit the business that borrows them. SOP 50 10 8.1 bars any purpose that does not benefit the small business (Sec. A, Ch. 3, Para. B.9). That includes a loan to an applicant for the benefit of an affiliated business. The regulation is 13 CFR 120.130(f).

A transfer to another company you own can hit a second rule. An entity in which a more-than-20% owner, officer, director or key employee owns or controls at least 20% is an Associate (13 CFR 120.10). Paragraph B.1 bars payments or loans to Associates.

## How related companies can borrow together

- **Real estate or equipment holding company.** An Eligible Passive Company can own property and lease it to the operating company. When they are co-borrowers, part of a 7(a) loan may fund the operating company's working capital or other assets (Sec. A, Ch. 3, Para. A.2.d.ii; 13 CFR 120.111).
- **Buying a sister business.** In a Business Expansion under Appendix 15, an existing business buys 100% of another in the same four-digit NAICS Industry Group. If the acquired company stays separate, both must be co-borrowers (App. 15, Para. A).

## Limits count together

SBA's loan maximums apply to the applicant and all affiliates as if they were one business (13 CFR 120.151; Sec. B, Ch. 1, Para. B.1).

## Sources

- [SOP 50 10 8.1, Sec. A, Ch. 3, Para. B, Restrictions on Uses of Proceeds, Paras. B.1 and B.9 (p. 53)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.130](https://www.ecfr.gov/current/title-13/section-120.130)
- [13 CFR § 120.10](https://www.ecfr.gov/current/title-13/section-120.10)
- [SOP 50 10 8.1, Sec. A, Ch. 3, Para. A, Eligible Uses of Proceeds, Para. A.2.d.ii (p. 51)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.111](https://www.ecfr.gov/current/title-13/section-120.111)
- [SOP 50 10 8.1, App. 15, Para. A, Business Expansion (p. 362)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.151](https://www.ecfr.gov/current/title-13/section-120.151)
- [SOP 50 10 8.1, Sec. B, Ch. 1, Para. B.1, Maximum Loan Amount (p. 117)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)