SBA New 7(a) Working Capital Pilot Program

The Small Business Administration (SBA) has officially launched its new 7(a) Working Capital Pilot Program (WCP), marking a significant step forward in small business lending.

Key Features of the WCP

1. Flexible Loan Product: Designed to meet the market needs of growth-oriented small businesses and give more options to SBA's network of lenders.

2. Innovative Fee Structure: Provides flexible support for both domestic and international capital needs.

3. Dual Approach:

   • Transaction-Based WCP: Allows businesses to fund individual projects or orders, enabling access to working capital earlier in the sales cycle.

   • Asset-Based WCP: Provides a cost-effective way to access working capital against assets, improving cash flow management and supporting supply chain resiliency.

4. Comprehensive Coverage: Supports both domestic and international sales under one facility.

5. Support for Energy Initiatives: Offers a new solution for businesses participating in Home Energy Rebate Programs funded by the Inflation Reduction Act.

For SBA Lenders

• Lenders approved for 7(a) loans can begin processing WCP loans on August 1, 2024.

• A new Preferred Lender Program (PLP)-WCP has been created for delegated authority.

• Lenders with delegated Export Working Capital Program (EWCP) authority receive immediate delegated authority for WCP loans.

• Other lenders can apply for delegated WCP status as outlined in the Program Guide.

Our Opinion:

The WCP demonstrates the SBA's commitment to supporting small business growth and adapting to market needs. By offering flexible, competitively-priced credit lines, this program has the potential to be a game-changer for many small businesses struggling with cash flow and expansion challenges. Alternative lenders should be closely monitoring the rollout of this program and its impact on the small business community.

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