SBA CAPLines Program Revamped

On November 4, 2011, the U.S. Small Business Administration (SBA) announced it has revamped its CAPLines Loan Program to better correspond with the lending practices of most banks.  Changes are a result of suggestions to improve the process from lenders at over 150 banks.   “These changes were based on conversations with lenders in all 50 states.  We listened to them and created a program that works for small businesses and lenders alike,” says Steve Smits, SBA associate administrator for capital access.

The purpose of the CAPSLines program is to assist small business owners in meeting their short-term and cyclical working-capital needs.   The program addresses five specific lines of credit: seasonal, contract, builders, standard-asset based and small-asset based.

The CAPLines Loan Program began in the early 1990’s, but due to regulations and procedures that required lenders to diverge from their standard lending practices, the program only produced about 1,300 loans in 15 years.   In comparison, other SBA loan programs produced nearly 40 times that amount.

Previous CAPSLines Program rules did not adequately address the needs of smaller businesses requesting temporary capital for projects requiring the purchase of the materials necessary to fulfill contracts.  The rules also had no provision to handle the needs of small businesses that are run virtually and have no physical site.

The hope is that the changes in the CAPSLines Program will, without delay, create an environment for small businesses to compete for contracts on an equal plane with larger businesses.  “More than half the people who work in this country either own small businesses or work in them, and more than two-thirds of the net jobs created come from small businesses, so your work is vital to our prosperity,” SBA administrator Karen Mills said of the program.  “We can’t wait around for Congress to act or for things to get better by themselves. We need to do the blocking and tackling for small businesses and work hand-in-hand with them to generate success.”

Will these changes benefit your small business?  Let us know your thoughts in the comment section below.

Kristin Travis   Kristin Travis is Program Assistant at the WBDC.

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Filed under Business Start-up, Finance, SBA

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