# Does a Contract CAPLine require assigning contract payments?

**Short answer:** 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.

Canonical page: https://www.sbaexpress.loans/answers/contract-capline-assignment-of-proceeds/
Last checked: 2026-11-08

Usually yes. Before the first disbursement on a Contract CAPLine, the contract proceeds generally must be assigned to the lender (SOP 50 10 8.1, Sec. B, Ch. 4, Para. F).

## What the assignment requires

You and the lender must both tell the contracting party in writing that an assignment is required. It must give the lender the right to receive all payments from that party. It must be in place before any disbursement for that contract, and the lender must get written acknowledgment.

## The five exceptions

The assignment may be skipped if at least two of these are true:

- The contract term is 12 months or less.
- You have a successful track record with the contracting authority on the same or similar contracts.
- Your debt service coverage exceeds 1:1.
- All contract proceeds go directly to the lender, or a funds control procedure is in place where there is a performance bond.
- Other available and worthwhile collateral secures the line.

## Subcontractors

A contract between a prime contractor and a subcontractor can be financed if at least two of seven listed conditions are met. One is a CAPLine amount under $300,000, and another is a contract term of 12 months or less.

## Collateral

You must give the lender a first lien on the financed contracts and their proceeds, unless an assignment exception applies (Appendix 19, Para. B.5).

## Sources

- [SOP 50 10 8.1, Sec. B, Ch. 4, Para. F (p. 154)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Appendix 19, Para. B.5 (Para. B begins p. 408)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)