# Can an SBA loan repay money I lent my company?

**Short answer:** Generally no, if you are an Associate of the business. SOP 50 10 8.1, Sec. A, Ch. 3, Para. B.1 bars payments to Associates, and a 504 project cannot refinance debt owed to one (Sec. C, Ch. 1, Para. C.10.n). Owners over 20% are Associates.

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Last checked: 2026-11-08

Generally no. If you are an officer, director, key employee or more-than-20% owner, you are an Associate under 13 CFR 120.10. Repaying you from proceeds is a payment to an Associate, and Section A, Chapter 3, Paragraph B.1 of SOP 50 10 8.1 bars it.

## Why a note does not change the answer

Paragraph B.1 names payments, distributions and loans to Associates. The restriction also reaches the replacement of funds used or borrowed for those purposes. A company note does not change who receives the money.

The 504 program says this directly. A 504 project cannot refinance debt owed to an Associate (Sec. C, Ch. 1, Paras. C.10.n and C.11.j).

## A smaller owner

An owner of 20% or less who is not an officer, director or key employee, and lacks control, falls outside the definition. That loan would still have to qualify under Appendix 14 as business debt. Debt qualifies when it is on the business balance sheet and on business tax returns showing the interest expense (App. 14, Para. A.1.h).

## Selling owners

The change of ownership exception covers buying an owner's interest (13 CFR 120.202). Ask your lender how a loan from a selling owner will be treated in a sale.

## Sources

- [SOP 50 10 8.1, Sec. A, Ch. 3, Para. B, Restrictions on Uses of Proceeds, Para. B.1 (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 § 120.10](https://www.ecfr.gov/current/title-13/section-120.10)
- [SOP 50 10 8.1, Sec. C, Ch. 1, Paras. C.10.n and C.11.j (Para. C begins p. 226)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 14, Para. A, General Requirements, Para. A.1.h (p. 355)](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 § 120.202](https://www.ecfr.gov/current/title-13/section-120.202)