SBA CAPLines are designed to help small businesses manage cyclical cash flow needs through revolving lines of credit. Small businesses can utilize SBA CAPLines for short-term working capital for a variety of needs, including:
- Acquiring inventory and processing larger orders.
- Supporting payroll during seasonal revenue fluctuations.
- Business expansion opportunity.
- Lower pricing structure than asset-based or other financing options.
Benefits of SBA CAPLines
- Up to $5 million in loans, for 12 months to 10 years.
- CAPLines can be renewed any time during the maximum term period.
- Interest-only loan payments.
- Up to 80% of eligible accounts receivable.
- Up to 50% of eligible inventory purchases.
Four Different Types of SBA CAPLines
(1) Contract CAPLine
Use of Proceeds: To finance the cost of one or more specific contracts, sub-contracts, or purchase orders, including overhead or general and administrative expenses, allocable to the specific contract(s).
(2) Seasonal CAPLine
Use of Proceeds: Must be used solely to finance the seasonal increases of accounts receivable and inventory (or, in some cases, associated increased labor costs). Funds cannot be used to maintain activity during slower periods of business cycle
(3) Builders CAPLine
Use of Proceeds: Borrowers must use the loan proceeds solely for direct expenses related to the construction and/or “substantial” renovation costs of a specific eligible project (residential or commercial buildings for resale), including labor, supplies, materials, equipment rental, direct fees like building permits and inspection fees, utility connections, construction of septic tanks, and landscaping. The cost of land may be eligible if it doesn’t exceed 20% of the project cost.
(4) Working Capital CAPLine
Use of Proceeds: For short-term working capital and operating needs.Proceeds must not be used to pay delinquent withholding taxes or similar trust funds (state sales taxes, etc.) or for floor planning.
- Working Capital CAPLine is secured with eligible trading assets found on the business and/or personal balance sheet.
- Seasonal, Contract, and Builders CAPLines are secured with the assets associated with the creation of what will be by using these CAPLines.
SBA International Trade Loan (ITL)
The International Trade Loan (ITL) is designed to help small businesses enter and expand into international markets and, when adversely affected by import competition, make the investments necessary to better compete overseas. It offers a combination of fixed asset, working capital financing and debt refinancing.
Maximum Loan Amount
$5,000,000 in total financing.
To be eligible, your business must:
- Be a for-profit business operating in the U.S.
- Be a small business, as defined by the SBA.
- Have, as a business owner, invested your own time and money into your business.
- Applicants must also establish that the loan will allow the business to expand or develop an export market or, demonstrate that the business has been adversely affected by import competition and that the ITL will allow the business to improve its competitive position.
Foreign Buyer Eligibility
Foreign buyers must be located in those countries wherein the Export-Import Bank of the U.S. is not prohibited from providing financial assistance.
Use of Proceeds
- For the facilities and equipment portion of the loan, proceeds may be used to acquire, construct, renovate, improve or expand these assets in the U.S. to produce goods or services involved in international trade.
- Working capital is an allowable use of proceeds under the ITL.
- Proceeds may be used for the refinancing of debt structured with unreasonable terms and conditions, including any debt that qualifies for refinancing under the standard SBA 7(a) Loan Program.
- Only collateral located in the U.S. (including its territories and possessions) is acceptable.
- First lien on property or equipment financed by the ITL or on other assets of the business is required. However, an ITL can be secured by a second lien position if the SBA determines there is adequate assurance of loan payment.
- Additional collateral, including personal guaranties and those assets not financed with ITL proceeds, may be required as appropriate.