StacksVerified U.S. regulatory reference

13 CFR §120.130

Verified against eCFR.gov as of June 20, 2026View official text on eCFR.gov ↗
SBA will not authorize nor may a Borrower use loan proceeds for the following purposes (including the replacement of funds used for any such purpose):
  1. (a)Payments, distributions, or loans to Associates of the applicant (except for ordinary compensation for services rendered or to facilitate changes of ownership in accordance with § 120.202);
  2. (b)Refinancing a debt owed to a Small Business Investment Company (“SBIC”) or a New Markets Venture Capital Company (“NMVCC”);
  3. (c)Floor plan financing or other revolving line of credit, except under § 120.340 or § 120.390;
  4. (d)Investments in real or personal property acquired and held primarily for sale, lease, or investment (except for a loan to an Eligible Passive Company or to a small contractor under § 120.310);
  5. (e)The applicant may not use any of the proceeds to pay past-due Federal, state, or local payroll taxes, sales taxes, or other similar taxes that are required to be collected by the applicant and held in trust on behalf of a Federal, state, or local government entity.
  6. (f)A purpose which does not benefit the small business; or
  7. (g)Any use restricted by §§ 120.201 and 120.884 (specific to 7(a) loans and 504 loans respectively).