Use of Proceeds
A description of exactly what a business intends to spend borrowed funds on, often required as part of a loan application, particularly for SBA and bank financing.
Lenders ask for a use of proceeds statement both to confirm the financing matches an appropriate product (equipment financing for equipment, working capital for operating expenses, and so on) and, for some programs, to verify funds are used as intended after closing.
Being specific and realistic in a use of proceeds statement, rather than vague, generally supports a smoother underwriting review, since it helps a lender see exactly how the financing fits the business’s actual plan.
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