{"ok":true,"canonical_url":"https://dealroom.so/glossary/ineligible-use-of-proceeds","api_url":"https://dealroom.so/api/public/glossary/ineligible-use-of-proceeds","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-use-of-proceeds","term":"Ineligible Use of Proceeds","group":"The loan itself","definition":"Using SBA loan funds for purposes not permitted by SBA rules. This can lead to the SBA denying its guaranty or even requiring immediate loan repayment.","what_it_means":"SBA 7(a) loan funds must be used for specific business purposes like acquiring a business, working capital, or equipment. They cannot be used for speculative investments, passive real estate, or repaying certain types of personal debt. Your lender will scrutinize the use of funds; ensure your planned uses align precisely with SBA guidelines.","url":"https://dealroom.so/glossary/ineligible-use-of-proceeds","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":"ineligible-for-sba-guaranty","term":"Ineligible for SBA Guaranty","url":"https://dealroom.so/glossary/ineligible-for-sba-guaranty"},{"slug":"sop-50-10","term":"SOP 50 10","url":"https://dealroom.so/glossary/sop-50-10"},{"slug":"sba-loan-authorization","term":"SBA Loan Authorization","url":"https://dealroom.so/glossary/sba-loan-authorization"}],"related_questions":[{"question":"Can I use proceeds from selling my primary residence as part of my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-proceeds-from-selling-my-primary-residence-as-part-of-my-equity-injection"},{"question":"Can I use proceeds from the sale of personal crypto assets for my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-proceeds-from-the-sale-of-personal-crypto-assets-for-my-equity-injection"},{"question":"What are a lender's responsibilities concerning the proper use of 7(a) loan proceeds by the borrower?","url":"https://dealroom.so/for-lenders/questions/what-are-a-lender-s-responsibilities-concerning-the-proper-use-of-7-a-loan-proceeds-by-the"},{"question":"Can I use proceeds from selling personal real estate as part of my SBA 7(a) equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-proceeds-from-selling-personal-real-estate-as-part-of-my-sba-7-a-equity-injectio"},{"question":"What is the lender's responsibility for validating the business purpose and use of proceeds certified on SBA Form 1919?","url":"https://dealroom.so/for-lenders/questions/what-is-the-lender-s-responsibility-for-validating-the-business-purpose-and-use-of-proceed"},{"question":"How does a lender ensure compliance with the 'use of proceeds' requirements for a 7(a) loan, particularly for working capital?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-ensure-compliance-with-the-use-of-proceeds-requirements-for-a-7-a-loan-p"}]},"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 Use of Proceeds","url":"https://dealroom.so/glossary/ineligible-use-of-proceeds","source_type":"DealRoom Data"}}