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More Funding for Small Business Owners

U.S. Small Business Administration will expand access to credit lines of up to US$5 million for small businesses.

June 10, 2024

The U.S. Small Business Administration (SBA) debuted the Working Capital Pilot (WCP) Program—a government-backed credit line designed to give greater flexibility than a traditional term loan. 

“Small businesses require working capital through competitively-priced lines of credit to operate efficiently and fund their pursuit of growth opportunities – which is why the SBA is meeting the market needs, especially in a higher interest rate environment, by adding the 7(a) Working Capital Pilot Program to our suite of loan products,” said Isabel Casillas Guzman, head of SBA.

CNBC reported credits line of up to US$5 million will be giving to small businesses. SBA’s new credit lines also are reported to have an annual fee and maximum interest rates based on the prime rate plus 3% to 6.5%, which would be approximately 12% to 15%, today.

The pilot program represents a significant expansion of the SBA’s loan programs by adding a line of credit offering along with a fee structure to increase flexibility for small businesses and lenders. Additionally benefits include:

  • The transaction-based WCP will allow small businesses to fund individual projects or orders, enabling access to working capital earlier in the sales cycle. 
  • Asset-based WCP loans will provide small businesses with a cost-effective way to access working capital against their assets, allowing small businesses to better manage their cash flow. 
  • For small businesses participating in the global marketplace, the WCP is designed to support both domestic and international sales.
  • For small businesses participating in the Home Energy Rebate Programs funded by the Inflation Reduction Act, the WCP provides a new solution to help companies ramp up capacity and mobilize service.

The Working Capital Program will launch this year, and complete details on the program will be posted at sba.gov. For lenders interested in the WCP, one-on-one counseling will be available from SBA’s team of Export Finance Managers. A list of Export Finance Managers can be found here.

Texas Challenges New Overtime Rule

June 10, 2024

The U.S. Department of Labor’s (DOL) new ruling to extend overtime protections—set to take effect on July 1—is being challenged in three Texas district courts. On June 3, two separate lawsuits filed by the same software company and in May by the state of Texas charge the DOL lacks the authority to make the change, according to Bloomberg Law.

The lawsuits hope to halt a final ruling announced in April that raises the minimum salary threshold to qualify for time-and-a-half pay after 40 hours of work in a week. Starting July 1, workers earning less than US$43,888 per year, or $844 per week, would be eligible for overtime pay. By January 1, 2025, the salary threshold would increase to $58,656 per year, or $1,128 per week. The DOL estimates that the new rule would make 4 million workers newly eligible for overtime, but the lawsuits challenge the new rule would allow overtime payments to an additionally 7.7 million workers, Reuters reported.

The new regulations also offers automatic increases to the salary eligibility level every three years, beginning in 2027, to keep pace with the changing labor market and wages, CNBC reported.

The current salary ceiling for overtime pay is $35,568 per year based on a limit placed in 2019—the first increase since 2004.

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