CapLines Business Loans To Help Small Businesses

CAPLines is the umbrella program under which the SBA helps small businesses meet their short-term and cyclical working capital needs. A CAPLines loan, except the Small Asset-Based Line, can be for any dollar amount that does not exceed SBA's limit.

There are five short-term working capital loan programs for small businesses under the CAPLines umbrella:

Seasonal Line: These are advances against anticipated inventory and accounts receivable to help during peak seasons when businesses experience seasonal sales fluctuations. Can be revolving or non-revolving.

Contract Line: Finances the direct labor and material cost associated with performing assignable contract(s). Can be revolving or non-revolving.

Builders Line: If you are a small general contractor or builder constructing or renovating commercial or residential buildings, this can finance direct labor and material costs. The building project serves as the collateral; loans can be revolving or non-revolving.

Standard Asset-Based Line: This is an asset-based revolving line of credit for businesses unable to meet credit standards associated with long-term credit. It provides financing for cyclical growth and recurring or short-term needs. Repayment comes from converting short-term assets into cash, which is remitted to the lender. Businesses continually draw from this line of credit based on existing assets, and repay as their cash cycle dictates. This line is generally used by businesses that provide credit to other businesses. As these loans require continual servicing and monitoring of collateral, additional fees may be charged by the lender.

Small Asset-Based Line: This is an asset-based revolving line of credit of up to $200,000. It operates like a standard asset-based line, except that some of the stricter servicing requirements are waived, providing the business can consistently show repayment ability from cash flow for the full amount.

Maximum Loan Amounts

Except the Small Asset-Based Line, CAPLine loans follow the SBA's maximum loan amounts. The Small Asset-Based Line has a maximum loan amount of $200,000.

Eligibility

Although most small businesses are eligible for SBA loans, some types of businesses are ineligible and a case-by-case determination must be made by the agency. Eligibility is generally determined by four factors:

• Type of Businesses Eligible
• Size
• Use of Proceeds
• Loan Maturities

Each of the five lines of credit has a maturity of up to 5 years, but because each is tailored to an individual business' needs, a shorter initial maturity may be established. CAPLines’ funds can be used as needed throughout the term of the loan to purchase assets, as long as sufficient time is allowed to convert the assets into cash at maturity.