Many small businesses have trouble finding the financial support they need. They often cannot find a loan that meets their capital needs, leaving them with financial worries. Sound familiar?
Luckily for some, the U.S. Small Business Administration’s Working Capital Pilot program could offer a lifeline. The WCP offers a $5 million line of credit to provide small businesses with a flexible way to manage their working capital needs. The Working Capital Pilot program will run until July 31, 2027.
But what exactly is the Working Capital Pilot program, and is it right for you? Let’s explore the key features and potential benefits this new program may have in store for you.
Key Benefits Of The WCP
Unlike traditional loans, the WCP is tailored to meet the needs of growing small businesses. Therefore, borrowers can use loans under the Working Capital Pilot program for the following:
- Transaction-based loans: can help fund individual projects or orders. This gives your business access to working capital sooner in your sales cycle.
- Asset-based loans: The SBA lets you get a loan by using your business’s assets as collateral. This helps improve cash flow management and makes your supply chain stronger.
- International sales support: Offering businesses participating in the global market to control sales under one facility, domestically and internationally.
Another important benefit is that the WCP has an annual guarantee fee. This fee works like the SBA Export Working Capital Program (EWCP). This means you pay a fee only for the time the loan is actively in use, therefore avoiding excessive upfront costs. Empowering you to choose the length of the loan term that best suits your business’s needs, offering effective growth opportunities for small businesses.
Understanding The Loan Terms
Let’s look into the facts and figures. Under the WCP, your business can borrow a maximum of $5 million. If you choose to borrow $150,000 or less, the SBA guarantees to cover 85% of the loss to the lender in case of default. On the other hand, if the loan is greater than $150,000 SBA guarantees to cover 75% of the loss.
The interest rate on the loan starts at a base rate of 3% and can go as high as 6.5%, depending on your borrowed amount. Additionally, lenders may offer a loan period of up to 60 months. Therefore, making applying for a loan under the WCP less risky.
The Fine Print – Key Eligibility Criteria
You may be thinking this is too good to be true, but to qualify for a line of credit under the WCP, your business must:
- Have been operating for a minimum of 12 months before applying.
- Ability to provide accurate financial statements, such as income statements, balance sheets, and inventory reports.
- Have a good credit history. Lenders are required to check your credit and make sure you can repay the loan.
Where To Go From Here
The Small Business Administration’s Working Capital Pilot program offers an excellent opportunity for you to leverage credit to upgrade your business’s financial flexibility, manage your cash flow, and fund your big ideas!
Contact us, and we’ll guide you through the application process by connecting you with an advisor who can help you make the most of this valuable program.
