More Funding for Small Business Owners

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.