Do you have to prove how you spent an SBA loan?
Short answer
Often yes, through your lender. SOP 50 10 8.1, Sec. B, Ch. 6, Para. D.3 requires the lender to document each disbursement and get evidence such as paid receipts. Working capital spent on normal operating expenses does not need to be documented.
Usually yes, through your lender. Section B, Chapter 6, Paragraph D.3 of SOP 50 10 8.1 requires the lender to document each disbursement on an SBA-guaranteed loan.
What the file must show
The documentation must show the recipient, date, amount and purpose of each disbursement. On most 7(a) loans, you and the lender sign SBA Form 1050 or the lender's equivalent at first disbursement.
SBA Express, Export Express and 7(a) Small loans skip Form 1050. Those lenders use the same written closing and disbursement procedures as for similar non-SBA loans (Para. D.11).
What counts as evidence
- Cancelled checks or paid receipts
- Joint payee checks
- Receipts or invoices marked paid by the seller or vendor
- An electronic funds transfer to a vendor, with a copy of the invoice
The working capital exception
Working capitalMoney for day-to-day costs such as payroll, rent and inventory. Full definition that pays normal operating expenses, such as payroll and utilities, does not need to be documented (Para. D.3.c). That applies when the SBA Terms and Conditions list working capital as a use.
Your own records
You certify that you will keep proper books and records, give the lender and SBA access, and furnish financial statements when asked (Para. D.8). SBA can review a lender's file at guaranty purchase and during oversight, so keep invoices and statements for what the loan paid for.
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
Janover Capital LLC is not a lender and is not the SBA. The lender makes the credit decision. A lender or marketplace may pay us a referral fee if we connect you, at no cost to you. Advertiser disclosure.