Understanding the SBA Working Capital Pilot Program

Working capital is the engine that powers small business. It’s the daily cash flow that covers critical expenses like salaries, rent and inventory. The U.S. Small Business Administration provides four separate working capital options to choose from when conventional lines of credit aren’t an option. The SBA’s newest entry, the Working Capital Pilot Program, may be their most flexible offering yet.

What is the SBA Working Capital Pilot Program?

With the goal of offering a simple, flexible, broadly accessible line of credit for eligible borrowers, the SBA unveiled the Working Capital Pilot Program in 2024. It offers the following features:

• Line of credit up to $5 million 
• Five-year maximum term, renewable annually
• Flexible short-term revolving credit to bridge the gap between invoicing and payment receivables (domestic and international)
• Non-revolving, transaction-based lending
• Supports domestic sales, foreign sales and foreign purchases (importing)
• Can be used for pre-shipment financing
• Support for federal, state and/or local government contracts
• Can be used to refinance eligible SBA and non-SBA debts

How does the program benefit small businesses?

The SBA’s Working Capital Pilot Program was designed to offer maximum flexibility for eligible small business borrowers. Its key benefits include:

• Market-based interest rates with a low SBA guaranty fee structure ranging from 0.25% to 1.35% of the guaranteed portion of the loan
• Up to 85% financing for purchase orders or contracts
• Up to 85% advance rate (the maximum loan amount a lender is willing to extend to a borrower) against eligible domestic accounts receivables
• Up to 70% advance rate against uninsured foreign accounts receivable sold on open account (90% if backed by a letter of credit or export-import bank/major private carrier insurance)
• Up to 60% advance rate against eligible inventory located within the United States
• Potentially use one line of credit for both revolving credit and transaction-specific financing

 Ready to explore SBA options for your business?

The first step is to talk to your banker to discuss your business’s specific financing needs. Banner is an SBA Preferred Lender, and one of the first lenders in the U.S. granted approval to process requests in the Working Capital Pilot Program. Our experts are well-versed in this and all the SBA financing options including the ins and outs of the application process.

If you and your banker determine SBA financing is your best option, the next step is to determine which program is the best fit. Want to learn more? Read our blog Working Capital: How to Choose the Best SBA Funding Option for Your Business, explore our SBA financing options or connect with us to discuss solutions tailored to you. Find a branch near you or call us at 800-272-9933.