How long can an SBA loan for working capital run?
Short answer
Up to 10 years. SOP 50 10 8.1, Appendix 17, Para. A.1 applies that limit to working capital, inventory and intangible assets, including goodwill. Your lender can set a shorter term.
SOP 50 10 8.1, Appendix 17, Para. A.1 (p. 390) says working capitalMoney for day-to-day costs such as payroll, rent and inventory. Full definition, inventory and intangible assets must not exceed 10 years. 13 CFR § 120.212(b) sets the same general limit for anything other than real estate or equipment with a useful life over 10 years.
Ten years is a ceiling
The term must be the shortest appropriate term based on the use of proceeds and the borrower's ability to repay. A lender may choose less, and practice varies by lender.
Revolving working capital has its own limits
- SBA Express lines: 10 years, including any term-out period
- Working Capital, Contract and Seasonal CAPLines: 10 years
- 7(a) Working Capital Pilot: up to 60 months, per SBA's lender page, for the pilot period August 1, 2024 through July 31, 2027
- Export Working Capital Program: 36 months
When working capital is part of a bigger loan
A loan with several uses can use a blended maturity. If 51% or more of proceeds are for real estate, it may run up to 25 years (Appendix 17, Para. A.5).
A change of ownership is different. Working capital inside an acquisition loan must be allocated a 10-year term (Appendix 15, Para. B.1, p. 370).
Sources
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