SBA SOP 50 10 8, B.Ch4.B.2 — Eligible Uses of Proceeds for EWCP
Verbatim text of SBA SOP 50 10 8 section B.Ch4.B.2 (Eligible Uses of Proceeds for EWCP), effective 2025-06-01. 4 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, B.Ch4.B.2 — Eligible Uses of Proceeds for EWCP — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8 B.Ch4.B.2
2. Eligible Uses of Proceeds for EWCP Proceeds can be used only to finance Export Transactions. Loans can be for single or multiple Export Transactions. i. Loan proceeds may be used for: a) Acquiring inventory for export or to be used to manufacture goods for export; b) Paying the manufacturing costs of goods for export; c) Purchasing goods or services for export; d) Supporting standby letters of credit related to export transactions e) For working capital directly related to export orders f) For foreign accounts receivable and inventory financing g) Support an Indirect Export: The term “indirect export” applies to situations where, although the Borrower’s direct customer is located in the United States, that customer will be exporting the items/services it purchased from the Borrower to a foreign Buyer. In such cases, the Borrower must provide documentation to the Lender from the Borrower’s domestic customer (typically in the form of a letter, invoice, order, or contract) that the goods or services are in fact being exported. h) Pre-shipment working capital supporting Export Transactions; i) Post-shipment foreign accounts receivable financing; and j) Lender fees and charges and any packaging fees paid k) For refinancing existing short-term export lines of credit with the transfer of collateral in accordance with Paragraph 2.b. below. ii. Loan proceeds may not be used to (13 CFR § 120.342): a) Support the Borrower’s domestic sales, except in the case of an indirect export; b) Acquire fixed assets or capital goods for use in the Borrower’s business; c) Finance pre-shipment or purchase order financing under a transaction- specific or transaction-based revolving EWCP facility for Foreign-to- Foreign Export Transactions. d) Acquire, equip, or rent commercial space overseas; or e) Finance professional export marketing advice or services, foreign business travel, participation in trade shows or support staff in overseas offices, except to the extent it relates directly to the transaction being financed. Debt Refinancing with Export Working Capital Program (EWCP) Loans. EWCP loan proceeds may not be used to pay a creditor in a position to sustain a loss (including the same institution’s debt). This includes refinancing debt that will shift all or part of a potential loss from the original Lender to the SBA. 13 CFR §§ 120.140(j)(1) and 120.201 EWCP loan proceeds may be used to refinance an existing EWCP loan or export line of credit. All refinanced debts must be supported by active export sales or pending export orders, and the EWCP terms and conditions in E-Tran must specify additional eligible uses of loan proceeds for subsequent draws. The following conditions apply to debt refinancing under EWCP: i. The loan being refinanced must be paid off with the EWCP loan, and the refinanced loan must be terminated after the pay-off.
SOP 50 10 8 B.Ch4.B.2.ii
ii. EWCP loan proceeds may not be used to refinance debt that is already on reasonable terms. iii. An existing EWCP loan or other short-term export line of credit reflected on the Applicant’s business balance sheet may be eligible for refinancing if it is reflected on the Applicant’s business tax returns (Schedule C for sole proprietorships) showing the interest expense associated with the debt. a) If the debt to be refinanced was the first extension of credit, the Lender must document and the Applicant must certify that the proceeds from the debt were used exclusively for the Applicant’s business, for an eligible purpose under 13 CFR § 120.342, and were not used for any ineligible purpose as set forth in 13 CFR § 120.130; and b) Except as stated in the next sentence, if the debt to be refinanced was used in whole or in part to refinance a prior debt, the loan being refinanced, including the associated interest, must be reflected on the Applicant’s balance sheet and business tax returns (Schedule C for sole proprietorships) for two full tax cycles prior to application. If the term of the debt to be refinanced is less than the period of two full tax cycles prior to application, the loan being refinanced, including the associated interest, must be reflected on the Applicant’s balance sheet and business tax returns for the full tax cycle(s) that occurred between the date of disbursement of the loan being refinanced and the date of application for the EWCP loan. iv. When refinancing debt, the loan application must include: a) A written analysis that addresses the following issues: i) The reason the debt was incurred; ii) The factor(s) that support that the proposed refinancing will not pay a creditor in a position to sustain a loss; iii) The reason for restructuring the debt (for example, over-obligated or imprudent borrowing); iv) The factor(s) that support that the debt being refinanced is not currently on reasonable terms;
SOP 50 10 8 B.Ch4.B.2.ii.v
v) How the new loan will improve the financial condition of the Applicant; vi) The reason(s) the Lender believes the debt to be refinanced no longer meets the needs of the Applicant; and b) Supporting documentation for each debt to be refinanced: Lenders are required to: i) Retain copies of notes being refinanced, security agreements, leases, and other documentation evidencing the debt to be refinanced; and ii) Submit with the application to LGPC for non-delegated loans, copies of all supporting documentation for the debt to be refinanced. v. Other conditions that apply to debt refinancing: a) A 7(a) loan may not be used to refinance a debt owed to a Small Business Investment Company (SBIC) or a New Markets Venture Capital Company 13 CFR § 120.130(b). b) The payment of trade payables is not considered to be debt refinancing. c) Initial disbursement must be made in accordance with the E-Tran Terms and Conditions; d) Prior to first disbursement, the Lender must ensure:
SOP 50 10 8 B.Ch4.B.2.ii.i
i) Collateral for the loan being refinanced is transferred to secure the EWCP loan. ii) Any outstanding receivable that would have been applied to pay down the refinanced loan will be applied to pay down the EWCP loan in the same percentage. Change of Ownership (13 CFR § 120.202). EWCP loan proceeds may not be used for a change of ownership.
Operationalizing SBA SOP 50 10 8, B.Ch4.B.2 — Eligible Uses of Proceeds for EWCP
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Source of record: https://claudeforcompliance.com/regs/sba-sop-b-ch4-b-2/
· register sba-sop-b-ch4-b-2 · Claude for Compliance. Free to read and download;
see regulatory updates and methodology.