The Small Business Administration has started soliciting insights on a new pilot program within the 7(a) Loan Program that seeks to enable participating 7(a) lenders to make working capital lines of credit through transaction-based and asset-based lines of credit as part of efforts to address the need of small companies for working capital.
According to a notice published Monday in the Federal Register, loans under the 7(a) Working Capital Pilot program may be approved up to $5 million and used to back international and domestic transactions.
Under the WCP program, lenders may authorize a loan term of up to 60 months and must pay a guarantee fee to SBA for each loan made.
In addition to other common uses for asset-based lines, loan proceeds under the program may be used to provide a temporary advance against state and federal tax credits or rebates.
“The purpose for allowing WCP loan proceeds to be used to provide a temporary advance against Federal and or state tax credits and/or rebates is to provide immediate access to a portion of the funds once they are earned by the business and have been confirmed by the Lender,” the notice reads.
SBA said it expects to approve about 270 WCP loans worth approximately $337 million combined in fiscal year 2025. The WCP program is set to take effect on Aug. 1 and expire by the end of July 2027.
Comments on the program are due Aug. 14.
SBA first announced the pilot program in June.