Sunday, October 7, 2012 - Article by: Christopher Shearer - Majestic Home Loans NMLS #173946 -
Use of 7(a) Loan Proceeds
If you are awarded a 7(a) loan, the loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business.
Eligible Use of 7(a) Loan Proceeds Include (Non-Exclusive):
The purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities
The purchase of equipment, machinery, furniture, fixtures, supplies, or materials
Long-term working capital, including the payment of accounts payable and/or the purchase of inventory
Short-term working capital needs, including seasonal financing, contract performance, construction financing and export production
Financing against existing inventory and receivable under special conditions
The refinancing of existing business indebtedness that is not already structured with reasonable terms and conditions
To purchase an existing business
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 effect 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 for the business's continuance until the loan supported by SBA is disbursed
To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow
For a non-sound business purpose
If you are unsure whether or not your anticipated use of funds is allowed, check with your SBA approved lender.
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