For SBA lenders
Short answer
Yes, an SBA 7(a) loan can include funds to cover property taxes and insurance premiums that are due at closing as part of the total project costs for real estate acquisition.
Property taxes and insurance premiums incurred at closing are considered legitimate and necessary costs associated with the acquisition of real estate. These can be included in the total project costs financed by the 7(a) loan, similar to other closing costs. However, ongoing property taxes and insurance premiums post-closing are operational expenses and generally not financed by the loan.
A borrower is acquiring a commercial property with a 7(a) loan. The closing statement includes $7,000 for prorated property taxes and a $3,000 annual insurance premium due upfront. The lender includes these as eligible uses of loan proceeds within the total project financing.
Insider move
Lenders must ensure that only taxes and insurance premiums due at closing are financed. Financing ongoing operational expenses can be considered an ineligible use of proceeds. Proper documentation of the closing statement is critical.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
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 uses of proceeds
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