Ineligible costs for 504 loans.

CFR · 2024-01-01 · US · Title 13

Costs not directly attributable and necessary for the Project may not be paid with proceeds of the 504 loan. These include, but are not limited to, the following: (a) Debt refinancing (other than interim financing), except as provided in § 120.882(e) and (g). (b) A CDC may not use 504 loan proceeds to pay any creditor in a position to sustain a loss causing a shift to SBA of all or part of a potential loss from an existing debt. (c) Third-Party Loan fees (commitment, broker, finders, origination, processing fees of permanent financing). (d) Ancillary business expenses, such as: (1) Working capital; (2) Counseling or management services fees; (3) Incorporation/organization costs; (4) Franchise fees; and (5) Advertising. (e) Fixed-asset Project components, such as: (1) Short-term equipment, furniture, and furnishings (unless essential to and a minor portion of the Project); (2) Automobiles, trucks, and airplanes; and (3) Construction equipment (except for heavy duty construction equipment integral to the business' operations with a remaining useful life of a minimum of 10 years).

official document · source cfr-2024 · id 13:§ 120.884