SBA Working Capital CAPLine

Lifelines for small businesses

by Joanna Bruno

In this still up and down economy, business is picking up but things remain tight for the small business community. We’re seeing many businesses operating on a short string, just able to pay overhead, keep their SBA loans current ‒ and keep the business afloat.

Enter the SBA’s revamped CAPLine program. In looking for ways the program could better benefit lenders and small businesses, the SBA solicited input from about 150 lenders across the country. The outcome: four distinct programs designed for specific borrower needs:

1) seasonal lines of credit to help businesses with seasonal operations;

2) contract loans to finance specific contracts, subcontracts or purchase orders;

3) builders lines of credit for small contractors or developers to construct or rehabilitate residential or commercial property; and

4) working capital, revolving lines of credit providing short-term capital to meet operating needs.

The Working Capital Lifeline

Working Capital CAPLine is by far the most widespread ‒ and most critical to helping many small businesses survive. The program grants short-term revolving lines of credit based on accounts receivable, bridging the gap between a business delivering its completed product and getting paid. The operating cycle begins with cash spent and is completed once cash is received. For the business, it’s a critical gap that could make the difference between success and failure.

So toss your SBA borrowers a lifeline! Help keep them from getting caught in the quicksand between accounts receivable and payments. Here are some of the basics:

Eligibility: Applicants must qualify under Standard 7(a) requirements; they must sell on credit and create accounts receivable.

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