HomeCan I Use An SBA Loan To Pay Off Personal Debt?

Can I Use An SBA Loan To Pay Off Personal Debt?

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Lawscape provides nationwide business debt relief services. We work a wide array of lenders, service providers, and types of business debt. We are able to restructure and reduce, all types of secured and unsecured business debt. 


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Our team has experience handling 10’s of millions in debt, ranging from SBA debt, to Merchant Cash Advance and more. 


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Regardless of the type of business debt you have, we can help. We have experience handling all types of secured and unsecured business debt. 


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Our company is led by experienced business debt relief experts who have experience handling secured and unsecured debt nationwide. 

Failing To Repay Business Debt Isn’t The End

Many business owners think failing to repay business debt means: your business is over.

This simply isn’t true. Business debt is a problem which CAN be handled, just like everything else; but only if you take pro-active steps. Lawscape helps you understand the law, and works with you to make sure that business debt isn’t the end of your business. 

What Are Some Ways We Can Help With Business Debt Relief?

Our experienced business debt relief consultants are here to help you through this stressful time. 

Can SBA Loans Cover Personal Debts? – A Word from Lawscape

Alright, let’s get down to business. So you’ve got an SBA loan and personal debt lying around like most entrepreneurs – pretty standard stuff, right? But you can’t just use that SBA loan as a magic wand to sweep all those personal debt issues under the rug. We’re talking credit card bills, mortgages, that kind of thing. Seems unfair? Well, those are the rules, folks. There’s a pretty solid structure set out by the SBA (Standard Operating Procedures or SOP) dictating what’s what when it comes to SBA loans.

Put That SBA Loan To The Right Use

So let’s take a quick look at what you can use your 7a SBA loan for, as per the SBA’s SOP.

1. Permanent working capital.
2. Revolving working capital.
3. Business must-haves like furniture and machinery.
4. Getting your hands on some land for that next business venture.
5. Renovating, buying, or building your business infrastructure.
6. Taking over another business.
7. Consolidating existing business debt.

It doesn’t take a genius to figure out personal debt isn’t a part of this list.

What Not to Do with your SBA Funds

The SBA not only guides on proper use of funds but also warns about improper uses which includes:

1. Paying associates except for actual services rendered.
2. Loaning to businesses that aren’t eligible.
3. Refinancing SBIC or NMVCC debt.

And the list goes on. One notable restriction is obviously the one that outright disallows using SBA loan funds to pay off personal debts. This comes down to two main factors: tax implications and the SBA’s central mission.

Tax-wise, if you use SBA funds for personal debts, you’re essentially evading income tax. The other factor revolves around the fact that the SBA program is primarily designed to nurture small businesses and generate job opportunities. Paying your personal debts doesn’t serve either purpose.

Consequences of Misusing SBA Funds

Let’s just say, you’re cruising for a bruising if you decide to channel SBA funds into paying off that horrendous personal debt. The loan could be declared defaulted upon and you could be slammed with immediate repayment orders. Plus, you could also face legal repercussions for fraud, not to mention tax complications with the IRS due to undisclosed income. Always remember, a business loan should be utilized for business, period.

Lawscape, Your SBA Lifeline

If you find yourself in a rough patch with an SBA loan default, feel free to reach out to the Lawscape. We specialize in SBA situations and provide expert legal advice to handle your case. You can give us a ring at 833-428-0937 or leave your details on our website.

Why Trust Lawscape with Your SBA or Treasury Debt Issues?

We’re not just another law firm; we have a proven track record of successfully resolving millions of dollars in SBA debts through offers in compromise and negotiated repayment agreements, without our clients having to file for bankruptcy or face home foreclosure. We have equally impressive results in defending millions of dollars in Treasury debts via AWG hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers, and Negotiated Repayment Agreements.

Our experienced attorneys are authorized by the Agency Practice Act to represent federal debtors countrywide before governmental bodies such as the SBA, SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service. Trust the Lawscape for expert advice and assured victory.

Lawscape Can Help You Manage Your Business Debt

If you’re struggling with business debt, we can help you understand your situation. During the initial consultation, we’ll go over the contract, and other legal documents you signed. After that, our firm will work with you to get a better understanding of your situation, and help you come up with a game plan that keeps your business alive. 

We Handle It All

01

Merchant Cash Advance

02

SBA Debt Relief

03

Secured Business Debt

04

Unsecured Business Debt

Everyone has different types of business debt. What matters is that you take it seriously. Regardless of whether it’s secured, or unsecured, you need to work with a firm that understands how to negotiate, reduce, settle, and manage, this business debt. 

Discuss your situation today

We are here to help you, and want nothing more than to help you save your business. Speak to our business debt relief specialists today.



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