Can I Use Sba Loan To Buy A Car (Sba Loan To Finance Business Vehicles)

SBA loans are possibly the best type of loan for businesses of all sizes. Whether a small or growing business, SBA loans are there to provide money for equipment, staff wages, technology, rent, utilities, and more. However, each SBA loan and every loan provider will have its own regulations and restrictions on what you can spend your money on.

It all comes down to the type of business plan you provide when applying for a loan. Some SBA loan lenders will only give a certain amount of money for investing in equipment specifically for the business, but not money to pay for the rent of the building.

If you’re looking to get an SBA loan for your business, you might be wondering “can I use an SBA loan to buy a car?”. Truth is, the answer isn’t as simple as you might think. Here is everything you need to know about how to get an SBA loan to finance business vehicles!

So, Can I Use An SBA Loan To Buy A Car?

The short answer to this question is: yes, if your SBA loan does not restrict you from buying a car, then you can use an SBA loan to buy a car.

It all comes down to your business plan, the type of SBA loan you go for, and what your lender restricts. If you have clearly explained that you intend to use some of the loan for a business vehicle like a car, then this will allow your lender to either deny or confirm your loan. There’s always a risk that your lender will refuse, however.

It’s important to remember that when a lender decides to give out a loan, they are taking a huge risk. They are taking a risk in the same way that the business is taking a risk. If you don’t have proof that your business needs the money for immediate relief to earn enough profit to repay the loan within the discussed time limit, then lenders aren’t willing to hand out loans.

Anything paid for within the load belongs to the lender. This means that equipment, the building, and business vehicles such as cars are legally the property of the lender until you pay the whole loan back including interest.

This is where the risk comes, because the car won’t technically be yours. So, if the car is damaged in any way, odds are your lender isn’t going to be very happy. Thankfully, if you find the right insurance company for the car, then it might not make a difference to your loan repayment.

Some lenders will be very specific about the make of the car you wish to purchase. You might be surprised that some agreements state that the borrower of the loan can only purchase American-made equipment with the funds of the loan. This means that you can only buy a car that is American-made with the loan.

If in doubt, it’s worth asking whether a particular loan can cover the expenses of a business car. Lenders appreciate honesty and questions, otherwise they will be reluctant to give you a loan.

Can I Buy A Car With An SBA Loan For Personal Use?

SBA loans are meant exclusively for business purposes, which means that you cannot use the money to fund any of your personal life. This includes paying your rent and utilities, paying for personal technology, and paying for a car for personal use. If you could use your SBA loan to buy a car for personal use, then everyone would be applying for these loans.

The car must be strictly used for business purposes until you have successfully paid off the whole loan.

Once completely paid, the car will no longer belong to the lender, but it will belong to the business. As you own the business, you then have the option of buying the car from your personal funds to own it for personal use.

Until then, the car should exclusively be used for business purposes as it is technically owned by the loan lender.

Which SBA Loan Do I Need To Get A Car?

Technically, any SBA loan can pay the cost of a business car if it is clearly stated within your business plan and if the lender allows for it. However, there are a couple of SBA loans that are best for getting a business car.

SBA Economic Injury Disaster Loans

If your business is experiencing temporary difficulties, the SBA Economic Injury Disaster Loan can provide a loan advance of up to $10,000 which does not have to be repaid. While this is mostly to provide immediate relief, you can use this money to buy a business car. This is a great way to make a down payment on a used utility vehicle without having to pay the money back.

SBA 7(A) Loans

SBA 7(a) loans are the most popular SBA loan type. As a working capital loan, the SBA 7(a) loan offers the most variety in what the funds can cover. The money you get from this loan is designed to provide finances for small businesses to start efficiently.

So, if your business relies on a business vehicle, there’s a chance that the loan can cover the cost of this. However, this will only happen if the business vehicle is essential to the business. If it’s an unessential vehicle, then the lender will be reluctant to lend the loan.


So, there you have it! As you can see, there is no universal “yes” or “no” answer for this question. Each loan and each lender will have different restrictions on whether a loan can buy a business vehicle.

In most cases, if the lender agrees that you can buy a car, the car must exclusively be used for business purposes rather than personal ones. Plus, until the loan and interest is completely paid off, the car legally belongs to the lender.

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