For SBA lenders
Short answer
Lenders are responsible for ensuring and documenting that 7(a) loan proceeds are used solely for the purposes authorized by the SBA, verifying all disbursements align with the approved use.
SOP 50 10 requires lenders to verify the proper use of loan proceeds. This means ensuring funds are disbursed only for the purposes outlined in the loan authorization (e.g., working capital, equipment, real estate, acquisition costs) and not for ineligible purposes (e.g., speculative investments, personal expenses). Misuse of proceeds is a common reason for guaranty repair or denial.
A $500,000 7(a) loan is authorized for $400,000 for equipment and $100,000 for working capital. The lender requires invoices for equipment purchases and verifies the working capital portion is deposited into the business operating account for authorized expenses.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
SBA Form 1919 - Borrower Information Form
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.
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