What Can The SBA Loan Be Used For?

Here is a wikipedia entry that has more in-depth information
https://en.wikipedia.org/wiki/SBA_504_Loan

Hi,
You could use the SBA loan for the following purposes

• To provide long-term working capital to use to pay operational expenses, accounts payable and/or to purchase inventory
• Short-term working capital needs, including seasonal financing, contract performance, construction financing and exporting
• Revolving funds based on the value of existing inventory and receivables, under special conditions
• To purchase equipment, machinery, furniture, fixtures, supplies or materials
• To purchase real estate, including land and buildings
• To construct a new building or renovate an existing building
• To establish a new business or assist in the acquisition, operation or expansion of an existing business
• To refinance existing business debt, under certain conditions.
• Following are the situations you can't use a SBA loan
• 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 affect 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 to continue the business until the SBA-backed loan is disbursed
• To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow
• For a purpose that is not considered to be a sound business purpose as determined by SBA
• If you are unsure whether or not your anticipated use of funds is allowed, check with your SBA-approved lender

Entrepreneurs can use SBA 504 loans for land and building purchases, new construction or maintenance, leasehold upgrades and purchases of heavy machinery and device. They also can be used for soft costs along with title searches, appraisals, attorney's fees and many others.

SBA 504 loans used for the expansion or acquisition of real estate with a term of 20 years, at the same time as equipment loans generally have a term of 10 years. The SBA 504 loan has a low rate of interest, that's fixed for the term of the loan.

Yes, you can prepay your SBA 504 loan; but SBA 504 loans are funded in a different way as compared to bank loans and consequently have specific repayment terms. Loan assumption may be a possible alternative to loan repayment based on your current situation.

The SBA not requires that the personal resources of entrepreneurs be used to lessen the SBA funded part of the entire financing program. Lenders must follow practical lending practices and require that resources either be injected or pledged as collateral for a specific loan, if considered sensible.

Her is a list of what you can and cannot do with the proceeds of an SBA loan. I am assuming you are in the US.


Use of 7 Loan Proceeds The Small Business Administration SBA gov

Merchant Advisors make an effort to provide 24-2 hour loan pre-qualification. The process from the completed application submission to disbursement of funds takes roughly 30 to 90 days, with respect to the complexity from the project and also the loan.

The Small Business Administration programs are made to encourage commercial loan companies to create financial loans to business proprietors and entrepreneurs. The Small Business Administration doesn't make direct loans, however they have many loan guarantee programs that may be very advantageous to companies.