CAPLines and SBA export loans: questions and answers

All 26 answers on CAPLines and SBA export loans

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What are SBA CAPLines and how do they work?

CAPLines are 7(a) lines of credit for short-term and cyclical working capital needs. The four types are Working Capital, Contract, Seasonal and Builders. The maximum is $5,000,000 (SOP 50 10 8.1, Sec. B, Ch. 4; 13 CFR 120.390).

Who qualifies for a Working Capital CAPLine?

A business that generates accounts receivable or holds inventory and meets SBA's core eligibility rules. Notes receivable do not count. Proceeds may only cover short-term working capital needs (SOP 50 10 8.1, Sec. B, Ch. 4, Para. A.1).

How does the borrowing base work on a Working Capital CAPLine?

The lender advances against eligible receivables and inventory reported on a Borrowing Base Certificate. Maximum advance rates are generally 80% of eligible domestic receivables and 50% of eligible inventory. Lines of $2,000,000 or more must use one (SOP 50 10 8.1, Sec. B, Ch. 4, Para. F).

What can a Contract CAPLine finance?

Only the costs of one or more specific contracts, including allocable overhead. It cannot pay for profit, fixed assets, refinancing, permanent working capital or a contract already well under way (SOP 50 10 8.1, Sec. B, Ch. 4, Para. A.2).

Does a Contract CAPLine require assigning contract payments?

Usually yes. SOP 50 10 8.1, Sec. B, Ch. 4, Para. F requires an assignment of contract proceeds before the first disbursement, unless at least two of five listed conditions are met.

What are the rules for a Seasonal CAPLine?

You need at least 12 calendar months of operations and a definite seasonal pattern. Proceeds can finance only seasonal increases in receivables and inventory, and sometimes related labor (SOP 50 10 8.1, Sec. B, Ch. 4, Para. A.3).

What is a Builders CAPLine and who can use one?

A Builders CAPLine finances small general contractors building or rehabbing residential or commercial property for resale. The term cannot exceed 60 months plus the estimated time to complete construction or rehabilitation (SOP 50 10 8.1, Sec. B, Ch. 4, Para. A.4; 13 CFR 120.391, 120.396).

Can an SBA CAPLine be renewed, and for how long?

Yes, within limits. A CAPLine under 10 years can be renewed if total revolving time stays within 120 months. A renewal extends the maturity and keeps the same loan number (SOP 50 10 8.1, Appendix 17, Para. B.5).

How does a Working Capital CAPLine compare to SBA Express?

A Working Capital CAPLine can reach $5,000,000, while an SBA Express line stops at $500,000. The CAPLine carries closer collateral monitoring and a larger guaranty. The SBA Express line runs on the lender's own procedures (SOP 50 10 8.1, Sec. B, Chs. 2, 4).

What is SBA Export Express and who qualifies?

Export Express is a 7(a) loan or line of up to $500,000 for export development (SOP 50 10 8.1, Sec. B, Ch. 5, Para. A). You need at least 12 full months in operation, unless the key personnel have demonstrated export expertise and the lender underwrites conventionally.

How much of an Export Express loan does SBA guarantee?

90% on loans of $350,000 or less and 75% on larger loans up to $500,000 (SOP 50 10 8.1, Appendix 16, Para. B.5). Loans approved within 90 days of each other can lower that percentage.

Can I use an Export Express line of credit for domestic sales?

Partly. A general Export Express line can support domestic sales, if no less than 70% of it will be used for export purposes. SOP 50 10 8.1, Sec. B, Ch. 5, Para. A.1.a sets that rule.

How is Export Express different from SBA Express?

Both top out at $500,000 and the lender decides. Export Express has a higher guaranty: 90% or 75% versus 50%. It must fund export activity and has a shorter line limit (SOP 50 10 8.1, Sec. B, Chs. 2, 5).

What is the SBA Export Working Capital Program?

Export Working Capital Program (EWCP) guarantees short-term working capital loans to exporters, up to $5,000,000, at 90%, for up to 36 months. Proceeds finance export transactions only (13 CFR 120.340; SOP 50 10 8.1, Sec. B, Ch. 5, Para. B).

Who qualifies for an SBA Export Working Capital loan?

Exporters that meet core 7(a) rules and have at least 12 full months of operations. A lender may accept sufficient management experience instead. Accommodation, food service and gas station businesses are excluded (SOP 50 10 8.1, Sec. B, Ch. 5, Paras. B.1 and B.2).

What is a transaction-based versus an asset-based EWCP loan?

A transaction-based EWCP loan advances against specific foreign orders or contracts, up to 90%. An asset-based loan is a revolving line against foreign receivables and export inventory, reported on a Borrowing Base Certificate (SOP 50 10 8.1, Sec. B, Ch. 5, Paras. B.5 and B.8).

What interest rate and fees apply to an EWCP loan?

SBA sets no maximum rate on EWCP loans and only monitors for reasonableness (13 CFR 120.344(c)). The FY2027 upfront fee is 0.25% to 0.80% of the guaranteed portion, by maturity (SBA Information Notice 5000-881797, p. 3).

What collateral does an EWCP loan require?

A first security interest in the export collateral: inventory, foreign receivables, credit insurance and letter of credit proceeds. It must be located in the United States (SOP 50 10 8.1, Appendix 19, Para. B.7; 13 CFR 120.343).

What is an SBA International Trade loan?

It is a 7(a) term loan of up to $5,000,000 with a 90% guaranty. It serves businesses growing exports or hurt by import competition (SOP 50 10 8.1, Sec. B, Ch. 5, Para. C; 13 CFR 120.345 to 120.348).

Which industries qualify for an International Trade loan?

SBA has determined that three groups meet the threshold with no added proof of injury. They are manufacturers (NAICS 31-33), mining and oil and gas businesses (NAICS 21) and listed food supply chain businesses (SOP 50 10 8.1, Sec. B, Ch. 5, Para. C.1.b).

Can an International Trade loan include working capital?

Yes, up to $2,000,000 per loan (SOP 50 10 8.1, Sec. B, Ch. 5, Para. C.2; Policy Notice 5000-877629). 13 CFR 120.348 separately limits the working capital guaranty, combined with your other 7(a) working capital loans, to $4,000,000.

Can an International Trade loan finance buying a business?

Sometimes. Export-based International Trade loans can support Business Expansion and employee stock ownership plan (ESOP) or Cooperative deals. Import-competition loans can also support Owner Buyouts. Neither can fund an Initial Acquisition (SOP 50 10 8.1, Sec. B, Ch. 5, Para. C.2).

What collateral does an SBA CAPLine require?

None at $50,000 or less. Larger lines depend on the type. Working Capital lines need a first lien on receivables and inventory. Contract lines need a first lien on the contracts. Builders lines need a lien on the property (SOP 50 10 8.1, Appendix 19, Para. B.5).

How do I apply for an SBA Export Working Capital loan?

You apply through a lender. A lender with PLP-EWCP authority can decide itself. Otherwise an Export Finance Manager reviews the file and SBA's processing center decides (SOP 50 10 8.1, Appendix 20, Para. B.7).

How is an EWCP loan different from an International Trade loan?

EWCP is short-term financing for export orders and receivables, up to 36 months. An International Trade loan is a longer term loan for U.S. facilities, equipment and some working capital. Both reach $5,000,000 with a 90% guaranty (SOP 50 10 8.1, Sec. B, Ch. 5).

Can an EWCP loan finance sales to a U.S. company that exports?

Yes. SBA treats those as Indirect Exports, which are eligible Export Transactions. Your U.S. customer must document that the goods or services are in fact being exported (SOP 50 10 8.1, Appendix 3; Appendix 20, Para. B.7).