{"data":{"id":"us/13-cfr-120.120","jurisdiction":"us","citation":"13 CFR 120.120","heading":"What are eligible uses of proceeds?","body":"A small business must use an SBA business loan for sound business purposes.\n(a) A Borrower may use loan proceeds from any SBA loan to:\n(1) Acquire land (by purchase or lease);\n(2) Improve a site (e.g., grading, streets, parking lots, landscaping), including up to 5 percent for community improvements such as curbs and sidewalks;\n(3) Purchase one or more existing buildings;\n(4) Convert, expand or renovate one or more existing buildings;\n(5) Construct one or more new buildings; and/or\n(6) Acquire (by purchase or lease) and install fixed assets (for a 504 loan, these assets must have a useful life of at least 10 years and be at a fixed location, although short-term financing for equipment, furniture, and furnishings may be permitted where essential to and a minor portion of the 504 Project).\n(b) A Borrower may also use 7(a) and microloan proceeds for:\n(1) Inventory;\n(2) Supplies;\n(3) Raw materials; and\n(4) Working capital (if the Operating Company is a co-borrower with the Eligible Passive Company, part of the loan proceeds may be applied for working capital and/or the purchase of other assets, including intangible assets, for use by the Operating Company).\n(c) A Borrower may use 7(a) loan proceeds for refinancing certain outstanding debts.","path":["Title 13—Business Credit and Assistance","CHAPTER I—SMALL BUSINESS ADMINISTRATION","PART 120—BUSINESS LOANS","Subpart A—Policies Applying to All Business Loans"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-13.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:24:18Z","sha256":"4d1b2a5fc46bcfa3eb5a02a9b067a57b2db9df3eb966859a3a92a26f299558e3","source_id":"us-cfr","stale":true,"prev":"us/13-cfr-120.111","next":"us/13-cfr-120.130"},"notice":"GroundRules: Original legal text. Not legal advice."}