SBA working capital loans and CAPLines

What is an SBA working capital loan?

Working capital is the cash a business uses to operate: paying staff and suppliers, carrying inventory and covering the gap between doing the work and getting paid. The SBA doesn’t have a separate “working capital loan” program. Working capital is one of the main uses of an SBA 7(a) loan, and the SBA also backs revolving credit lines through CAPLines, the MARC program for manufacturers and SBA Express.

Because the SBA guarantees part of the loan, lenders can offer longer repayment terms than a typical bank credit line, and the SBA caps the interest rate a lender can charge.

What can you use SBA working capital for?

• Payroll, rent and other operating expenses
• Inventory, raw materials and supplies
• Carrying customer invoices while you wait to be paid
• Building up inventory and staff before a busy season
• Labor and materials for a specific contract or purchase order
• Marketing, hiring and other growth costs

Working capital loans can’t be used for passive investments or personal expenses. Paying off existing debt is a refinance, which follows separate rules: see SBA debt refinancing.

Should you choose a term loan or a line of credit?

It depends on whether the need is one-time or recurring.

• A 7(a) term loan gives you a lump sum repaid in regular installments over up to 10 years. It suits a one-time need, such as funding growth, adding permanent inventory or rebuilding cash after a slow year.
• A revolving line of credit lets you draw, repay and draw again. It suits needs that come and go, such as seasonal inventory or waiting on customer payments, and you pay interest only on what you’ve drawn.

SBA-backed revolving lines include:

• CAPLines, for asset-based, contract, seasonal and builder needs, up to $5 million.
• MARC, a newer line built for manufacturers.
• SBA Express lines of credit of up to $500,000, which can last up to 10 years, including the repayment period at the end. Express lenders make the credit decision themselves in exchange for a smaller SBA guarantee. See SBA Express loans.

What are SBA CAPLines?

CAPLines are the SBA’s main program for revolving lines of credit under 7(a). There are 4 types, each built for a different kind of short-term cash need:

CAPLine	What it finances	How it’s repaid
Working Capital line	Ongoing operating costs, secured by accounts receivable and inventory (an asset-based line)	From collections as customers pay
Contract line	Labor and materials to carry out specific contracts or purchase orders	From payments on each contract
Seasonal line	Inventory, receivables and labor for a seasonal increase in business	From sales during and after the season
Builders line	Construction or renovation of residential or commercial property for resale	From the sale of the property

CAPLines can go up to $5 million, with maturities of up to 10 years. Builders lines are the exception: they run up to 5 years plus the construction period.

Asset-based lines come with more reporting than a term loan. Expect to send the lender regular borrowing base certificates along with receivables and inventory reports.

Definition

Borrowing base:

The amount you can draw on an asset-based line at any given time, calculated by the lender as a share of your eligible accounts receivable and inventory. As receivables and inventory grow, so does the credit available to you.

What is the SBA MARC program for manufacturers?

MARC, short for Manufacturers’ Access to Revolving Credit, is a revolving line of credit the SBA introduced on September 4, 2025. It gives manufacturers a line sized for production cycles, raw materials and payroll. MARC lines go up to $5 million for manufacturers and $2 million for wholesale and food-supply-chain businesses.

A MARC line has a revolving period followed by a repayment period, so the total term can run longer than a CAPLine. Draw and repayment limits are set by the SBA and the lender, so ask lenders for the current terms when you compare offers.

Manufacturers may also qualify for reduced SBA fees, as the fee table below shows. Not every SBA lender offers MARC lines, so ask early whether a lender does.

What are SBA working capital loan rates and fees?

Working capital loans and CAPLines follow the 7(a) rate caps. The lender sets the rate, but it can’t exceed a base rate (usually prime) plus a maximum margin that depends on loan size. With the prime rate at 7.00%, the maximums are:

Most working capital loans and lines have variable rates that move with prime. The SBA’s upfront guaranty fee is charged on the guaranteed portion of the loan, and short-term loans pay a reduced fee:

Lenders may also charge reasonable fees for setting up and monitoring a line of credit, within SBA limits. Ask every lender for a written estimate of all fees before you compare offers.

What do lenders look for on a working capital loan?

1. Cash flow. Historical cash flow that covers your existing debt plus the new payments.
2. Financial statements and tax returns, plus a current profit and loss statement and balance sheet.
3. Receivables and payables aging reports, especially for asset-based lines.
4. A clear use of funds showing what the money pays for and how it will be repaid. For contract and seasonal lines, that means the contract itself or last year’s seasonal pattern.
5. Collateral. Lenders aren’t required to take collateral on 7(a) loans of $50,000 or less. Lines of credit are usually secured by the receivables and inventory they finance.
6. Guarantees and eligibility. Owners of 20% or more personally guarantee the loan, and all owners must be U.S. citizens or nationals.

The SBA sets no minimum down payment for working capital loans to existing businesses, so the lender decides. Start-ups follow different rules: see SBA loans for startups.

How do you find the right lender for working capital?

Not every SBA lender offers revolving lines, and asset-based CAPLines take specialized monitoring that some lenders don’t do. A lender that regularly finances working capital in your industry already understands your cash cycle, from seasonal swings to slow-paying customers.

SBA Loan Connect ranks lenders using the SBA’s public loan data, so you can see which lenders actually fund businesses like yours before you apply. Partner lenders are clearly labeled. See how we rank lenders.