7(a) Working Capital Pilot program

Lines of credit are the most flexible and affordable way for businesses to manage their working capital needs. With a line of credit, interest is only charged when the loan is in use, making it the most efficient way to access working capital.

SBA's 7(a) WCP is a pilot loan program offering monitored lines of credit within the 7(a) loan program. The 7(a) WCP can support a range of financing needs for growing small businesses and brings together the best features of the existing permanent 7(a) line of credit delivery methods. In addition, the 7(a) WCP introduces a series of innovative features:

New annual fee structure

• The 7(a) WCP has a fee structure modeled after SBA’s 7(a) Export Working Capital Program (EWCP)
• Using an annual short-term guaranty fee, the 7(a) WCP fee structure charges a proportional amount for each year the facility is in use
• Establishing an annual guaranty fee structure allows borrowers to customize the line to their exact needs, paying only for the time that they require

Support for transaction-based lending

• The 7(a) WCP can support project financing, allowing a borrower to access the working capital at an earlier point than they would under a traditional line of credit
• Through this unique financing method, the 7(a) WCP can enable a borrower to access funding earlier in their sales cycle
• With the support of a Transaction Based 7(a) WCP, small businesses can take on transformational opportunities with the confidence they can cover all related costs

Support for asset-based lending

• The 7(a) WCP is positioned to help small businesses access the working capital they need to support and grow their business
• Using a 7(a) WCP, small businesses can efficiently borrow against their accounts receivable and inventory
• The 7(a) WCP will also help transition borrowers from SBA Express loans into a larger working capital facility to support their growth

A new take on export finance

• The 7(a) WCP can provide working capital against domestic and international orders under a single loan facility
• New-to-export firms will be able to use the 7(a) WCP to open international markets without having to obtain a separate line of credit

One-on-one counseling

• SBA offers one-on-one counseling with SBA’s Export Finance Managers, subject-matter experts who will guide lenders and businesses through their working capital transactions

Lenders currently approved to process 7(a) loans can begin processing 7(a) WCP loans on August 1, 2024. Lenders with delegated EWCP authority will be immediately provided with delegated authority to make 7(a) WCP loans. Lenders who do not maintain delegated EWCP authority may apply for delegated 7(a) WCP status with the requirements outlined in the Program Guide.

SBA encourages lenders to request support from their local Export Finance Managers for individual transactions (including domestic transactions) as needed.

In addition to the core requirements identified in SOP 50 10, Section A, the following 7(a) WCP-specific eligibility requirements apply:

• Limited to businesses that
  
  • Have a history of 12 full months of operations prior to filing an application
  • If supporting an acquisition – the acquiring borrower must have a history of 12 full months of operations prior to filing an application
  • Can produce timely and accurate financial statements, accounts receivable and accounts payable agings, and inventory reports
• The lender must obtain updated financial statements on the borrower annually and perform a full credit analysis as part of any renewal
• As a lender offering the WCP program, it is important that the institution have the operational controls necessary to administer the monitoring requirements, which mirror industry standards for asset-based facilities