WASHINGTON, D.C. — The U.S. Small Business Administration (SBA) recently announced that SBA 7(a) lenders may now begin accepting applications for the newly-introduced 7(a) Working Capital Pilot (WCP) Program. This initiative aims to provide small businesses with affordable working capital, aligning with President Biden’s Investing in America agenda.
“Small businesses need affordable working capital to pursue revenue growth opportunities made available thanks to President Biden’s Investing in America agenda,” said SBA Administrator Guzman. “The SBA has expanded access to capital and increased small dollar lending over the past three and a half years – now, we are strengthening loan offerings through this new 7(a) Working Capital Pilot program to provide growth-oriented small businesses with competitively-priced lines of credit to fund orders and projects as they scale. The Biden-Harris Administration continues to level the playing field and ensure small businesses can compete, create jobs, and strengthen our nation’s economy.”
Addressing Market Needs
The SBA established the Working Capital Pilot Program to create a flexible loan product tailored to the market needs of growth-oriented small businesses. This program seeks to provide more options to the SBA’s network of lenders when structuring lines of credit.
Utilizing an innovative fee structure, the WCP offers two types of loans: the Transaction-Based WCP and the Asset-Based WCP. The Transaction-Based WCP allows small businesses to secure funds for individual projects or orders, providing access to working capital earlier in the sales cycle. The Asset-Based WCP offers a cost-effective way for small businesses to access working capital against their assets, enhancing their cash flow management and supporting supply chain resiliency.
Benefits for Small Businesses
The SBA remains committed to delivering a range of updated product offerings under the 7(a) Loan Program. These include SBA Express loans, CAPLines, Export Loans, and the new Working Capital Pilot Program. Small businesses can use the SBA’s Lender Match page to connect with participating SBA lenders offering competitive rates and fees.
For small businesses engaged in the global marketplace, the WCP supports both domestic and international sales within one facility. Additionally, for those involved in the Home Energy Rebate Programs funded by the Inflation Reduction Act, the WCP provides a new solution to help increase capacity and serve more homeowners with energy conversions.
Guidance for SBA Lenders
Lenders currently approved to process 7(a) loans can start processing 7(a) WCP loans beginning August 1, 2024. Recognizing the specialized nature of this lending type, the SBA has introduced a new delegated authority for the WCP called the Preferred Lender Program (PLP)-WCP.
Lenders with existing delegated Export Working Capital Program (EWCP) authority will automatically receive delegated authority to make 7(a) WCP loans. Those without delegated EWCP authority can apply for the delegated 7(a) WCP status by following the requirements outlined in the Program Guide, available for download on the SBA’s Training on Demand page.
The introduction of the 7(a) Working Capital Pilot Program represents a significant step in providing small businesses with the financial tools needed to grow and succeed. As the SBA continues to enhance its loan offerings, small businesses can look forward to more robust support and greater opportunities for expansion.
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