{"ok":true,"canonical_url":"https://dealroom.so/glossary/ineligible-purpose","api_url":"https://dealroom.so/api/public/glossary/ineligible-purpose","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"ineligible-purpose","term":"Ineligible Purpose","group":"The loan itself","definition":"Specific uses of SBA loan proceeds that are prohibited by regulation. Buying a business for speculative purposes or personal investments, for example, is not allowed.","what_it_means":"Your lender will review the use of proceeds carefully to ensure all funds are for eligible business acquisition costs. Any portion of the loan for an ineligible purpose, even small, can jeopardize the entire SBA guaranty. Be transparent about how funds will be used.","url":"https://dealroom.so/glossary/ineligible-purpose","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"use-of-proceeds","term":"Use of proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"slug":"7a-loan","term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"slug":"ineligible-businesses-rule","term":"Ineligible businesses rule","url":"https://dealroom.so/glossary/ineligible-businesses-rule"},{"slug":"total-project-costs","term":"Total project costs","url":"https://dealroom.so/glossary/total-project-costs"}],"related_questions":[{"question":"What types of 'lending' activities make a business ineligible for an SBA 7(a) loan as a primary purpose?","url":"https://dealroom.so/for-lenders/questions/what-types-of-lending-activities-make-a-business-ineligible-for-an-sba-7-a-loan-as-a-prima"},{"question":"How does the SBA define an 'ineligible business' for 7(a) loan purposes regarding passive income?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-define-an-ineligible-business-for-7-a-loan-purposes-regarding-passive-inc"},{"question":"What is the purpose of the SBA's loan guaranty?","url":"https://dealroom.so/sba-loans/basics/what-is-the-purpose-of-the-sba-s-loan-guaranty"},{"question":"What is the primary purpose of SBA Form 1919 for eligibility?","url":"https://dealroom.so/for-lenders/questions/what-is-the-primary-purpose-of-sba-form-1919-for-eligibility"},{"question":"What is the primary purpose of the Universal Purchase Package (UPP)?","url":"https://dealroom.so/for-lenders/questions/what-is-the-primary-purpose-of-the-universal-purchase-package-upp"},{"question":"What makes a business ineligible for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-makes-a-business-ineligible-for-an-sba-7-a-loan"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Ineligible Purpose","url":"https://dealroom.so/glossary/ineligible-purpose","source_type":"DealRoom Data"}}