SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to purchase land, provided the land is for the business's operational use and not for speculative purposes or passive investment.
Purchase of land is an eligible use of proceeds for an SBA 7(a) loan, particularly when it is integral to the business's operations, such as for a new facility, expansion, or a site for a new business. The land must be actively used by the business, and cannot be primarily for generating rental income.
A construction company needs a larger yard for equipment storage and material staging. They can use an SBA 7(a) loan to purchase a 5-acre industrial lot for this purpose. However, if they bought a vacant lot purely to hold it for future appreciation, it would be ineligible.
Insider move
Lenders must ensure the land purchase is directly tied to the business's operational needs and not speculative. They will require appraisals and environmental reports for the real estate to assess its value and any potential liabilities.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
SBA 7(a) Loans Overview
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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