Glossary · The loan itself
In short
This is when loan funds are used for something other than what the SBA Loan Authorization specifies. If you divert funds, it's a serious violation that can lead to loan default and personal liability.
The SBA requires strict adherence to the authorized Use of proceeds. Ensure every dollar is traceable to approved uses like working capital, equipment purchase, or debt refinancing. Any deviation, even minor, can trigger a loan default and potentially expose you to fraud allegations.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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