The CAPLines Loan Program is the program under which the SBA helps small businesses meet their short-term and cyclical working-capital needs. A CAPLines loan can be for any dollar amount (except for the Small Asset-Based Line), and the SBA will guarantee 75% up to $750,000 (80% on loans of $100,000 or less).
There are five short-term working-capital loan programs for small businesses under CAPLines:
Seasonal Line. This line advances funds against anticipated inventory and accounts receivables for peak seasons and seasonal sales fluctuations. It can be revolving or non-revolving.
Contract Line. This line finances the direct labor and material costs associated with performing assignable contract(s). It can be revolving or non-revolving.
Builders Line. If you are a small general contractor or builder constructing or renovating commercial or residential buildings, this line can finance your direct labor and material costs. The building project serves as the collateral, and loans can be revolving or non-revolving.
Standard Asset-Based Line. This is an asset-based revolving line of credit that provides financing for cyclical, growth, recurring, and/or short-term needs. Repayment comes from converting short-term assets into cash, which is remitted to the lender. Businesses continually draw, based on existing assets, and repay as their cash cycle dictates. This line generally is used by businesses that provide credit to other businesses. Because these loans require continual servicing and monitoring of collateral, additional fees may be charged by the lender.
Small Asset-Based Line. This is an asset-based revolving line of credit of up to $200,000. It operates like a standard asset-based line except that some of the stricter servicing requirements are waived, providing the business can consistently show repayment ability from cash flow for the full amount.
Use of Proceeds. CAPLines may be used to:
Finance seasonal working-capital needs.
Finance direct costs needed to perform construction, service and supply contracts.
Finance direct costs associated with commercial and residential building construction without a firm commitment for purchase.
Finance operating capital by obtaining advances against existing inventory and accounts receivable.
Consolidate short-term debt.
Each of the five lines of credit has a maturity of up to five years, but, because each is tailored to your individual needs, a shorter initial maturity may be established. You may use CAPLines funds as needed throughout the term of the loan to purchase assets, as long as sufficient time is allowed to convert the assets into cash by maturity.