SBA Lines Of Credit: Everything You Need To Know About It

When you start a business, money is the biggest thing you need to grow it. However, getting loans for a new or small business is not always easy. In such cases, owners take a different approach to satisfy their credit requirements. You may have heard of SBA Lines of Credit if you are looking for small business loans.

SBA provides multiple lines of credit for businesses that require short-term loans or working capital. These lines of credit can be worth around $5 million. Usually, such types of loans work best when you urgently need short-term working capital for many reasons.

If you are interested in the SBA line of credit for new business, we highly recommend you read this blog. Here we have provided all the details you should know about the line of credit. Let’s start!

Meaning Of SBA Lines Of Credit

An SBA line of credit is a type of short-term financing option by which businesses receive funds that can be drawn when needed. A business can apply for a loan of up to $5 million. The maximum time you can take to repay this loan is ten years.

The best thing about this loan is you only have to pay interest for the amount you have borrowed. And this is much better than other SBA loans, where you have to pay interest for the total amount of credit.

Most of these SBA credit lines are related to the CAPLines program. Also, they offer fixed or revolving lines of credit to help businesses reach their credit needs. 

Various Kinds Of SBA CAPLines

There are only four kinds of SBA CAPLines:

Seasonal CAPLines

Such type of credit is mainly designed for small businesses that face seasonal valleys and peaks in revenue. You can use these funds to cover the costs of increased labor or other expenditures brought on your business due to the busy season.

Contract CAPLines

The second type is best for businesses that require funds to start their working contracts. These funds can cover the cost of labor, supplies, materials, etc.

Builders CAPLines

The third type is quite obvious from its name. Such loans are for general contractors and builders who operate on commercial or residential buildings. You may use these funds to cover the cost of materials or direct labor that directly relates to renovation or building projects.

Working CAPLines

The final line of credit helps small businesses cover every kind of operating expense. It mainly includes labor, manufacturing, inventory, etc. You may have to pay additional interest for this type compared to others.

The Terms And Rates For The Line Of Credit

CAPLines have the same borrowing maximum as well as interest rates as the SBA 7(a) loan program. The reason is that they are part of those loans. 

SBA Line Of Credit            Max Repayment Timeline Terms Type
Seasonal CAPLine. 10 years. The loan lenders normally need payments after every busy season the business goes through. They may use your business accounts inventory or receivable as a form of collateral. There are also chances that you may need to put up your personal assets.     Revolving or fixed.
Contract CAPLine. 10 years. If you use CAPLine funds to fulfill the contract, you need to repay that amount to the lender whenever the client settles the invoice.  Revolving or fixed.
Builders CAPLine. 5 years. You may use the CAPLine fund for your building project. The time to repay this fund is whenever you sell the property or within 36 months of construction completion (you can choose any of these two to repay). Here, the building you are constructing with the loan will also act as collateral for the line of credit.    Revolving or Fixed.
Working CAPLine 10 years. For deciding on this loan credit limit, the lender will see both your business collateral and your average sales cycle. And talking about collateral, you may use your accounts inventory or receivable. However, the lender may also need your personal or business assets as collateral.     Revolving.
SBA Express line of credit. 7 years. SBA Express lines of credit consist of higher interest rate ranges compared to CAPLines. The max rates range between 7.75% to 9.75%.   Revolving.

In situations when SBA loans default, the government is responsible for replying to the lender with a percentage amount of the outstanding balance. We also call this loan’s “guarantee.” In the past, the max SBA guarantee for the credit line was increased to 90% on a temporary basis. However, currently, it ranges around 85% for credit lines up to $150,000, and for lines that exceed this amount ranges at 75%.

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What Are The Qualifications For The SBA Line Of Credit?

The SBA line of credit has the same requirements as the standard requirements of an SBA loan. You must be a small for-profit business and should operate in the U.S. Also, you must have good standing with your existing government loans. 

Suppose you are a business owner looking for CAPLines credit. In that case, there are some additional requirements you need to meet:

  • Seasonal CAPLines: The business you are running has to be at least in operation for a year. Furthermore, your business has to show the seasonal ups and downs during the entire year.
  • Contract CAPLines: Your business has to be profitable while having a clean history of completing contracts on time. In addition, your business must be able to fulfil new contracts as well.
  • Builders CAPLines: As a contractor, you must have a history of bidding on and completing the construction projects successfully within the time limit. You can also include renovation projects in it. 
  • Working CAPLines: The business must consist of accounts receivable or inventory.

There are many SBA-approved lenders that also require a good credit score of 690. Furthermore, they like to lend to those companies that have been running the business for two years with strong annual revenue.

How Can You Apply For An SBA Line Of Credit?

You must know that SBA doesn’t give out lines of credit or loans. In fact, the loans are given out by approved SBA lenders. Firstly, to get an SBA Lines of credit, look out for the banks you have healthy relationships with to see if they offer such loans. You may also use the SBA’s Lender Match tool.

Alnícór Consulting provides the best rates of SBA loans for small businesses. We know the difficulties in getting loans from traditional banks as small businesses. Our lending process is simple and convenient, with no hidden charges or criteria. We will also tell you the needed documents to apply for the loan.

Sometimes SBA needs to review the application for the loan. In such cases, the turnaround period lasts 5 to 10 business days. 

You can contact us through our mail Id: Or you also have the option to call us at 183-325-6267 or 18332111777. Apply for a loan now!


What Is The Credit Score Required By SBA?

If you want an SBA loan, most lenders ask for at least a credit score of 680 or higher. They may approve the loan for a 640 credit score in a few cases. However, for better chances of getting a loan, having a credit score of 680+ is recommended. 

Does Taking An SBA Loan Will Affect My Personal Credit?

No, the business loan doesn’t impact your personal credit if you keep them separate from each other. 

Can We Use An SBA Loan To Purchase A House?

Yes, you can use an SBA loan to buy a house. The SBA 504 loan is formed for this reason only. It helps small businesses to expand by buying fixed assets like real estate.

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