Qualifications for Working Capital SBA Line of Credit
Working capital SBA CAPLine offers a maximum of $5 million in funds so that businesses can change short-term assets including pending invoices into cash. In addition to the 7(a) requirements, the business should be able to make accounts receivable or have inventory. It is possible to avail a working capital SBA line of credit for refinancing short-term revolving debt.
In certain conditions, the working capital SBA CAPLine is used to finish off the short-term debt. These are as follows.
- When remaining debt is paid off: The existing debt should be finished with the working capital SBA line of credit, and you cannot use it again.
- Risk cannot be transferred to SBA from another lender: The risk of suffering a loss which a customer takes on, cannot be transferred from the current lender to the SBA. In case the loan is in difficulty, the working capital line of credit cannot be used to pay off the same. Furthermore, it cannot be used to pay off back taxes.
- There is enough collateral: The assets used as collateral should offer complete coverage for the debt which will be refinanced.
- The lender approves refinance: Note that you need to get approval from the lender in order to use the working capital SBA line of credit to refinance debt.