The U.S. Small Business Administration (SBA) introduced the Working Capital Pilot (WCP) Program, a new loan program that supports the complex working capital needs of growing firms. As the SBA’s first new loan program in more than a decade, it supports lines of credit up to $5 million and fully complements the agency’s term loan programs. The SBA designed the WCP to support daily working capital needs, inventory purchases, and project financing. Many small firms require a line of credit to support new clients and extended sales terms, and WCP provides a consistent framework that lenders and businesses can easily navigate. The initiative also combines domestic and export financing under one program, making it easier for internationally active small businesses to access capital.
Addressing the Needs of Small Businesses
The WCP supports both asset-based and transaction-based facilities. Asset-based WCP loans are best positioned to accommodate small businesses with working capital needs that are relatively consistent throughout the year. An asset-based WCP is also the facility structure that is most likely to be used by firms that are building a strategic inventory position.
For companies who are taking on a contract or a large new buyer, the transaction-based WCP may be more suitable as it can support advances against individual orders. These facilities can be structured to support a single contract or used on a revolving basis for multiple projects. Transaction-based WCP loans can also be paired alongside asset-based facilities to support a company’s need for both types of working capital financing.
A Flexible Tool for Small Business Exporters
The WCP is modeled after the SBA’s Export Working Capital Program (EWCP). The key difference is that WCP is designed to support both domestic and export financing under a single facility. Now, this means that small businesses can obtain a single line of credit for their domestic business that can also expand to support international orders when and if opportunities present. For many small businesses, international trade represents a growth opportunity but can complicate existing financing arrangements. The WCP looks to simplify financing for businesses that may begin domestically but later expand internationally.
A New Tool for Community Bank Lenders
The WCP is designed to complement existing SBA finance programs, offering community bank lenders a new tool to serve their small business clients. The WCP offers lenders a new revenue stream and an opportunity to serve more small businesses in need of flexible financing. Currently, all 7(a) lenders are eligible to submit transactions under WCP. Additionally, WCP allows delegated authority for lenders with experience in asset-based lending programs, such as EWCP, SBA CAPLine, and the Export-Import Bank’s Working Capital Guaranty Program. This feature will accelerate loan processing and expand the program’s reach. Program details and lender participation guidelines are available on the SBA’s website. Please visit www.sba.gov/7a and go to the WCP Program link or contact your local WCP Subject Matter Expert Miguel Penaloza at miguel.penaloza@sba.gov.
