What Are SBA CAPLines?
Apart from term loans, Small Business Administration has another program for lines of credit known as CAPLines. These can only be utilized for certain purposes like seasonal needs or working capital. The CAPLines Program lets small businesses access lines of credit which might be revolving or fixed. These are used to meet short-term or cyclical working capital requirements. These programs are offered by SBA-approved lenders. Additionally, these are partially guaranteed by the SBA, which includes 75% to 85% of the total loan amount.
Generally, one who qualifies for SBA loans under the CAPLines Program should provide collateral such as purchase orders, property liens, accounts receivable, inventory, and other assets. In case the company assets do not offer collateral, SBA loan requirements under this program include pledging personal assets of the owner, such as a lien on residential real estate.
If the loan is approved, there is a certain amount of time allowed to repay the credit line. Note that certain programs allow extensions. The applicable interest rates could be variable or fixed, depending on the prevalent rates and a spread which is different for different loans. The customer is free to draw from the CAPLines credit as needed. In case the line is of the revolving type, you can also draw from repaid credit.