The U.S. Small Business Administration (SBA) has announced the launch of the 7(a) Working Capital Pilot (WCP) Program. This new program is designed to offer a flexible line of credit, providing small businesses with more options and greater flexibility compared to traditional term loans.
Key Highlights of the 7(a) Working Capital Pilot Program:
- Innovative Credit Lines: The WCP offers a newly structured line of credit through 7(a) lenders, backed by the SBA. This includes a transaction-based option for funding individual projects or orders and an asset-based option to manage cash flow against assets.
- Support for Growth: This program aims to help small businesses operate efficiently and pursue growth opportunities, especially in a high-interest-rate environment.
- Global and Domestic Sales: The WCP is designed to support small businesses participating in both domestic and international markets, providing comprehensive support under one facility.
- Energy Sector Support: For those involved in the Home Energy Rebate Programs funded by the Inflation Reduction Act, the WCP offers a new solution to help ramp up capacity and services.
Benefits of the WCP:
- Flexible Fee Structure: An annual SBA upfront guaranty fee allows small businesses to customize their loans according to their needs. This fee structure, first introduced under the SBA’s 7(a) Export Working Capital Program, significantly reduces the cost of loans with shorter maturities.
- Supply Chain Resiliency: The asset-based WCP loans provide a cost-effective way for small businesses to manage their cash flow and support supply chain resiliency.
Getting Started:
The Working Capital Program will launch this year, with full details available on the SBA website. For lenders, SBA offers one-on-one counseling through its team of Export Finance Managers.
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