For SBA lenders
Short answer
Yes, a 7(a) loan can be used for working capital to cover inventory purchases, especially for seasonal businesses that require upfront capital to stock up before their peak season.
Working capital is an eligible use of 7(a) loan proceeds, and this can specifically include funding for inventory purchases. For seasonal businesses, this is a critical use to manage cash flow fluctuations. The amount of working capital must be justified by the business's operational cycle and financial projections.
A Halloween costume store, a highly seasonal business, secures a $100,000 7(a) working capital loan. The proceeds are used from June through August to purchase inventory in anticipation of the September/October selling season, helping to smooth out cash flow.
Insider move
Lenders must analyze the business's seasonality and cash flow cycle to ensure the working capital amount is appropriate and that repayment terms align with the business's ability to generate revenue. Proper monitoring of inventory levels may also be necessary.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Types of 7(a) Loans
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on use of proceeds
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