Section 120.130 - Restrictions on uses of proceedsSBA will not authorize nor may a Borrower use loan proceeds for the following purposes (including the replacement of funds used for any such purpose):
(a) Payments, distributions, or loans to Associates of the applicant (except for ordinary compensation for services rendered or to facilitate changes of ownership in accordance with § 120.202 ) ;(b) Refinancing a debt owed to a Small Business Investment Company ("SBIC") or a New Markets Venture Capital Company ("NMVCC");(c) Floor plan financing or other revolving line of credit, except under § 120.340 or § 120.390 ;(d) Investments in real or personal property acquired and held primarily for sale, lease, or investment (except for a loan to an Eligible Passive Company or to a small contractor under § 120.310 ) ;(e) The applicant may not use any of the proceeds to pay past-due Federal, state, or local payroll taxes, sales taxes, or other similar taxes that are required to be collected by the applicant and held in trust on behalf of a Federal, state, or local government entity.(f) A purpose which does not benefit the small business; or(g) Any use restricted by §§ 120.201 and 120.884 (specific to 7(a) loans and 504 loans respectively).61 FR 3235, Jan. 31, 1996, as amended at 76 FR 9218, Feb. 17, 2011; 76 FR 63545, Oct. 12, 2011; 82 FR 39502, Aug. 21, 2017; 85 FR 7648, Feb. 10, 2020; 85 FR 80588, Dec. 14, 2020; 88 FR 21085, Apr. 10, 2023 82 FR 39502, 9/20/2017; 85 FR 7648, 3/11/2020; 85 FR 80588, 3/27/2020; 88 FR 21085, 5/11/2023