What can SBA Express loan proceeds be used for?
Short answer
Most eligible business purposes: working capital, equipment, real estate, inventory, a revolving line, debt refinancing and buying a business. Proceeds must be used exclusively for business purposes (SOP 50 10 8.1, Sec. A, Ch. 3; Sec. B, Ch. 2, Para. A).
SBA Express proceeds can fund most eligible business purposes. They must be used exclusively for business-related purposes (SOP 50 10 8.1, Sec. B, Ch. 2, Para. A).
Allowed uses
Sec. A, Ch. 3, Para. A lists what 7(a) proceeds can buy:
- Land and site improvements, as part of an eligible project.
- Buying, renovating, expanding or constructing buildings.
- Buying and installing fixed assets.
- Inventory, supplies and raw materials.
- Working capital for everyday operations, including business software.
- A revolving line of credit, which SBA Express permits.
SBA Express can also refinance debt under Appendix 14 and finance a change of ownership under Appendix 15 (Para. A.1 and A.2).
Not allowed
Sec. A, Ch. 3, Para. B bars these uses:
- Payments or distributions to associates of the business, with limited exceptions.
- Floor plan financing.
- Property held primarily for future development, sale, lease or investment.
- Past-due payroll, sales or similar trust taxes.
- Paying a creditor in a position to sustain a loss that would shift to SBA.
- Debt owed to a Small Business Investment Company or New Markets Venture Capital Company.
Working capitalMoney for day-to-day costs such as payroll, rent and inventory. Full definition proceeds may not refinance existing debt (Sec. A, Ch. 3, Para. A.2.d). Lenders may set narrower limits of their own.
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