Contract Lines of Credit under SBA CAPLine
A contract SBA CAPLine offers businesses a maximum of $5 million in line of credit business in order to purchase materials and to remunerate the labor included in the contract. Apart from the standard 7(a) requirements necessary to qualify, the business must demonstrate their profitability, experience, and ability to perform the work taken up. This is done while you clear the designated purchase order, subcontract, or contract.
In case you do other work on a contract or if you complete projects, you could benefit from the contract SBA line of credit. For example, if your company has the contract to build a bridge, you can utilize the contract SBA CAPLine to avail funds required to buy the raw materials, and to pay for labor. After completion of the project, you can use funds received from the customer to repay the amount taken from the SBA line of credit.
In order to qualify, it is essential to present proofs that you have a track record of similar and profitable contracts. Further, you also have to show that you will be able to complete the project on time, and with profits. The additional collateral requirements include first lien position on the contract and the proceeds.