If you’re looking for access to capital with favorable terms for small businesses, the 7(a) loan program may be for you. One of the benefits of the 7(a) program is that the loans can be used for a wide range of expenses, so it’s flexible to fit your business’ needs.
Let’s take a look at the allowable uses for 7(a) loans.
Which Expenses Can 7(a) Working Capital Loans Be Used For?
One of the key advantages of 7(a) working capital loans up to $250,000 is that they can be used to cover a wide variety of expenses. This is beneficial for small businesses who may need help covering an array of costs including wages, rent, payroll, inventory, and more.
PPP loans had limited options for spending, but they were also forgivable if program requirements were met. SBA 7(a) loans have more flexibility on eligible spending, but the loans are not forgivable.
SBA 7(a) working capital loan funds may be used on one expense category or may be split among multiple categories. The permissible categories are:
Similar to PPP loans, 7(a) loan funds can be used to cover payroll expenses. This includes salaried, hourly, part-time, and 1099 employees.
2) Operating Expenses
This includes short-term expenses such as marketing, membership programs, inventory purchases, and day-to-day expenses.
You can use 7(a) loan funds to make rent payments for your place of business.
This includes all utility expenses incurred by a business.
7(a) Loan Example in Practice: Construction Industry
Sometimes it’s easier to understand a loan program by looking at a practical example. Let’s consider the allowable uses for a 7(a) loan of $250k or less obtained by a construction company.
Loan funds could be used to pay laborers, temporary workers, skilled workers, equipment operators, and finishers.
2) Operating Expenses
You could spend your funding on expenses like subcontractors, materials, transportation, gasoline, tools, etc.
You can use 7(a) loan funds to make rent payments for your office.
7(a) funds can be used for any utility expenses you might have.
With NEWITY, you can apply for an SBA 7(a) loan up to $250,000 in less than 30 minutes.
Have questions before you get started? Connect with NEWITY to see how a 7(a) working capital loan can help your business thrive in the years to come.
Get started with a SBA 7(a) Business Loan today!