SBA loans are loans given by the Small Business Association to start-up companies to help them fund their business. There are several types of SBA loans, but the most common loan is an SBA 7(a) loan.
If you have received an SBA loan, you may be wondering what you can purchase with this loan. Most things are valid. However, there are a few invalid uses. You cannot use the SBA business loan to pay off other creditors. You also cannot use the loan for business expenses in the speculation, lending, investment, rental real estate, gambling, or nonprofit industries.
The valid uses for SBA loans include expansions, renovations, purchasing vacant land, purchasing buildings, start-up costs, purchasing equipment, inventory, seasonal lines of credit, and refinancing debt. Many businesses use SBA loans for start-up costs, and these can look like research expenses, employees, technology, and advertising expenses.
SBA loans are often used for working capital. Working capital is a requirement for many American small businesses. For example, you need cash to pay employees, buy and move inventory, and keep your business in the green.
You may also use your SBA loan for equipment. Equipment can refer to big purchases like manufacturing machinery, but it can also include furniture, fixtures, and working vehicles. If your SBA loan is primarily to purchase equipment, you can demonstrate the necessity of the equipment purchase. This can make it more likely for you to receive an SBA loan.
SBA loans can be crucial to small businesses, and they can be used to fund a variety of things, including purchasing land, refinancing debt, and purchasing equipment. If you are curious about applying for an SBA loan, you can contact Aspen Commercial Lending to speak with a team of experts about your loan options.