SBA loan basics
Short answer
Yes, an SBA 7(a) loan can be used to purchase raw land, but only if the land is essential for the business's current or future operations and is part of a larger project like construction.
SBA 7(a) loan proceeds can finance the purchase of land and buildings, including raw land, provided that it is for the primary use of the small business. However, the purchase of raw land for speculative purposes or for investment is ineligible. If the land is to be used for future construction or business expansion, the loan must typically include funds for the actual construction or development that will take place on the land.
A growing restaurant plans to build a drive-thru location and uses a $1 million SBA 7(a) loan. This loan can include $200,000 to purchase a vacant lot, but only because the remaining $800,000 is allocated for the construction of the new restaurant building on that specific land.
Insider move
Lenders must ensure the land purchase is integral to the business's operational needs and not speculative. They will require detailed plans for the land's development and ensure that funds for construction are part of the overall loan package.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
SBA 7(a) Loans Overview
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 what it can be used for
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