Ineligible Uses of Funding

Ineligible Uses of Funding. SBLGP transactions may not have certain features, including any of the following: confessions of judgment, prepayment or “double-dipping” fees, or upfront fees or charges paid by the small business, excluding fees to the program, that exceed two percent for loans greater than $25,000 or $500 for loans under $25,000. Under the program, the borrower may not use the loans for any of the following uses or purposes: • Refinance existing debt unless the debt is from a non-affiliated lender* • Used in conjunction with other federal loans or guaranties • Finance the acquisition, construction, improvement, or operation of real property, which is to be held primarily for sale or investment, such as commercial real estate ownership • Finance any business engaged in lending, directly or indirectly • Finance of a nonbusiness purpose • Repayment of delinquent federal or state income taxes • Reimburse funds owed to any owner, including any equity injection * A lender may refinance a borrower’s existing loan, line of credit, extension of credit, or other debt originally made by an unaffiliated lender only if the following conditions are met: • The amount of the refinanced loan or other debt is at least 150 percent of the previous outstanding balance, • The transaction results in a 30 percent reduction in the fee-adjusted APR contracted for the term of the new debt, and • Proceeds of the transaction are not used to finance an extraordinary dividend or other distribution.