SBA loan basics
Short answer
Working capital funds can be used for general operating expenses such as payroll, rent, utilities, inventory, accounts payable, and other day-to-day costs to support business growth.
Working capital provides businesses with the liquidity needed for daily operations. Eligible uses include covering short-term operational expenses that are crucial for the business's stability and growth, but not for ineligible purposes like owner distributions or speculative investments.
A retail business receives $100,000 in working capital. They can use these funds to pay employee salaries for three months, purchase new seasonal inventory, or cover unexpected increases in utility costs.
Insider move
Lenders ensure working capital funds are used for legitimate business operating expenses as outlined in the loan authorization. They often require documentation for significant disbursements to prevent misuse.
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
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.
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