Contributed by Gary Markle, President, Central Bank & Trust
The U.S. Small Business Administration recently revamped their CAPLines program after engaging financial industry leaders in all 50 states to implement changes benefiting SBA lending partners—such as Central Bank & Trust—and small business owners.
According to the SBA revised guidelines, the new CapLines program gives small businesses more flexibility to finance the contracts, subcontracts, and purchase orders they compete for and win. “By addressing the short-term and cyclical working capital needs of small businesses, the revolving line of credit will help them manage their cash cycle, scale up, and create jobs,” the SBA explains.
From our perspective as an SBA lender, these revisions make this once-underutilized lending program more attractive and allow us to fund a borrower’s short-term working capital needs under the SBA guidelines. For businesses that are growing and have been awarded new contracts, banks now have the capacity to do revolving lines of credit up to $5 million utilizing their own credit parameters. This means business owners can work directly with a dedicated SBA lender and process their line of credit expeditiously.
Key benefits of the CAPLines program (which can be found at SBA.gov):
– Small businesses can pledge accounts receivable, inventory, contracts, and purchase orders to secure an SBA revolving line of credit.
– The SBA will no longer require small business owners without buildings or equipment to use their personal assets as collateral to secure working capital.
– Small business subcontractors can now obtain an SBA-guaranteed line of credit to finance their work on a contract with a federal prime contractor.
To understand the benefits and details of the CAPLines program, small business owners should work with a lender who knows the SBA policies, procedures, and systems to deliver and service this type of revolving credit. The small business owner should also know who they’re talking to, who’s processing the loan, and who’s making the decisions that potentially affect their future growth.