Glossary · The loan itself
In short
This is using SBA loan proceeds to provide funds to another business or individual, which is a prohibited use of funds.
SBA 7(a) loans are meant to finance the borrower's direct business needs, not to act as a bank for others. Using loan proceeds for relending, or for speculative investments, will render your loan ineligible. Ensure your use of proceeds clearly aligns with direct operational or acquisition costs of the business you are buying.
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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