Using the SBA 7(a) Loan for Small Business Expenses

There's a reason the SBA 7(a) loan program is so popular with business owners: the uses for the SBA 7(a) loan are as extensive as they are varied.

Seriously. Think of any business expense, and there's a good chance the SBA 7(a) loan can cover it. Retail store needs a serious design makeover? Use the 7(a). Need to replace the student bookkeeper you hired in your startup days with a full-time accountant? The SBA loan program has your back. A real estate purchase, new office furniture, your very first business mortgage (eek!), or even the money to refinance a bad debt -- SBA 7(a) loans can help you achieve your biggest business goals.

What Are the Top Uses for the SBA 7(a) Loan?

Before we dive in, it's worth noting that there isn't just one 7(a) loan program. There are actually multiple types of 7(a) loans that small business owners can use to get funding. Depending on what you plan to use it for, you may find that one of the other 7(a) programs is actually better for your goals. Check out our SBA loan comparison chart below to see how the different SBA products serve different purposes.

SBA Loan Comparison: Uses for Different SBA Loans

Loan Name Maximum Amount Valid Uses Invalid Uses
SBA 7(a) Standard Loan $5 Million
  • Expansion
  • Renovation
  • Vacant land
  • Building purchases
  • Start-up costs
  • Equipment and fixtures
  • Working capital
  • Inventory
  • Seasonal line of credit
  • Refinancing debt
  • Paying off inadequately secured creditors
  • Expenses for businesses in the following industries: speculation, lending, investment, rental real estate, gambling, nonprofit
SBA 7(a) Small Loan $350,000
  • All from 7(a) Standard list
  • All from 7(a) Standard list
SBA 7(a) Express Loan $350,000
  • All from 7(a) Standard List
  • Revolving line of credit
  • All from 7(a) Standard list
SBA 504 Loan $5.5 Million
  • Building purchases
  • Land
  • Renovation
  • Furniture and equipment
  • All from 7(a) Standard list
  • Costs not directly attributable to, or necessary for, the project
SBA 7(a) CAPLines Loan $5 Million
  • Short-term, cyclical, revolving and non-revolving working capital
  • Consolidation of short-term debts
  • All from 7(a) Standard list
  • Long-term expenses
SBA Export Working Capital Program Loan $5 Million
  • Short-term, cyclical, revolving and non-revolving working capital for export transactions
  • All from 7(a) Standard list
  • Expenses for non-export businesses
SBA Export Express Loan $500,000
  • Export business expenses
  • All from 7(a) Standard list
  • Expenses for non-export businesses
SBA Veterans Advantage Loan $5 Million
  • All from 7(a) Standard list
  • All from 7(a) Standard list

The bottom line is that the SBA's mission is to help small business and strengthen the U.S. economy, and one of the ways it does this is by guaranteeing each of these loan programs for business owners like you.

Examples of Uses for the SBA 7(a) Loan

Depending on the SBA lender you ultimately work with, you can use your SBA 7(a) loan for a wide variety of expenses. Here are the top uses for the loans that fall under the SBA umbrella:

Start-up costs. Start-ups have unique needs, including research expenses, employees, technology, and advertising expenses. Unless you're independently wealthy, you'll need help financing your new business venture -- and as long as your business is eligible for the SBA 7(a) and you have good credit, you should have no trouble securing an SBA 7(a) loan for your startup.

Buying a business. Want to buy a business? To get financing through an SBA program, you'll need to have proven aptitude in your industry, good credit, and collateral to invest. SBA lenders often provide loans in the 7(a) program to business owners who can demonstrate that they're buying a potentially lucrative business, so if your business plan and industry experience is solid, an SBA loan may be the perfect stepping stone.

Working capital. Using the SBA 7(a) loan for working capital is a must-have for thousands of American small businesses. You need cash to pay employees, buy and move inventory, and keep your business afloat. The SBA 7(a) program can get you the working capital you need to survive a rough patch or scale up.

Equipment. From time to time, you'll have to make big, infrequent purchases like machinery, furniture, fixtures, and work vehicles. You'll undoubtedly need smaller equipment purchases as well, like supplies and raw materials. If you can demonstrate that a particular equipment purchase is essential to the ongoing success or growth of your business, there's a good chance you can obtain an SBA 7(a) equipment loan to fund it.

Land and real estate. Whether you’re renting office space, buying a building, or planning new construction on vacant land, you can use the SBA 7(a) loan to help pay for the physical space that your business occupies. Improve your landscaping, redo your parking lot and adjacent street, or adjust the grading with up to 5 percent for public improvements like curbs or sidewalks. Use the SBA 7(a) for business mortgages on owner occupied real estate, acquiring land or a new facility, or expanding to a second location.

Repairing existing capital. Do you need new computers or technology upgrades in order to stay competitive in your industry? What about commercial vehicle repairs, leasehold improvements, or operating equipment that needs updating? Repairing existing capital with the SBA 7(a) loan program can help bring your business into the 21st century.

Refinancing debt. A revolving line of credit, a commercial mortgage, even another SBA loan: if your business is being held down by bad loan terms, an SBA 7(a) loan can help you refinance.

Of course, your SBA lender will have their own criteria about how to use the proceeds from the SBA 7(a) loan you choose. Different financial institutions may have more or less stringent requirements for how you can use the loan. To find a lender in your area that meets your criteria, let us match you with one of the best in our digital rolodex of lenders. We are capital markets geeks, and we pride ourselves on our ability to sort the best from the worst in the industry!