Sponsors (4)
The bill expands SBA 7(a) eligibility to let many small businesses finance software, cloud, and AI tools—boosting digitization and operational efficiency—while increasing potential taxpayer exposure and fraud/enforcement and risking a shift in lending away from non-tech investments.
Small businesses (borrowers) can use SBA 7(a) loans to purchase business software, cloud services, and AI-enabled tools, lowering upfront costs for digitization and helping firms adopt productivity-enhancing technologies.
Small businesses can finance payroll, HR, accounting, and inventory systems with 7(a) proceeds, which may improve operational efficiency and cash flow for borrowers and simplify lender oversight of borrower operations.
The bill explicitly authorizes these technology purchases, reducing legal uncertainty for the SBA and lenders and potentially speeding loan approvals and clarifying compliance expectations.
Taxpayers could face increased federal exposure if expanding eligible loan uses leads to higher 7(a) loan volume or higher default rates, raising potential government costs.
Loans intended for technology purchases could be misused to fund ineligible R&D or other prohibited activities despite exclusions, creating fraud and enforcement risks and compliance burdens for taxpayers and honest borrowers.
Lenders might shift underwriting toward software/cloud/AI financing (which could carry different margins or risk profiles), disadvantaging borrowers who need funding for non-tech investments like equipment or inventory.
Based on analysis of 2 sections of legislative text.
Allows SBA 7(a) loans to finance business software, cloud services, and AI business tools for operations, while excluding R&D.
Allows Small Business Administration 7(a) loans to be used to buy or pay for business software, cloud computing services, and related technologies — including business tools that use artificial intelligence — to help run day-to-day operations. The change clarifies that this does not authorize use of 7(a) funds for research and development and does not change existing definitions of working capital; past loans for these purposes remain permissible.
Introduced February 4, 2025 by Mark Alford · Last progress June 24, 2026