7(a) Working Capital Pilot Program

June 17, 2024

by a searcher from Pennsylvania State University in Philadelphia, PA, USA

Thread for any leading insights and/or perspectives people have on the recently-announced 7(a) Working Capital Pilot (WCP) Program. I haven't seen a thread on this topic on my feed -- please comment with a link if one exists.

Curious about the timing of this program and any relevant 'knowns' at this time. This community would benefit from perspectives on how and if folks may incorporate this into their acquisition or post-acquisition financing strategies.

Perspectives welcome from lenders, searchers, operators, and anyone else with a valuable perspective on this topic.

https://www.sba.gov/article/2024/06/06/biden-harris-administration-launches-working-capital-pilot-program

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Unless something has changed in the last few days, all of the details of the program have not been released yet. I am not even sure if they can launch a new program like this without legislative approval. My guess is the program will be included in the upcoming budget process. But it does appear it is going to be used for working capital purposes, which makes it unlikely to be used for business acquisitions. There is already a working capital program available (CAPlines), but it requires a monthly borrowing base and most lenders do not use it because of the monitoring requirements. That is why most borrowers and lenders use the express line of credit up to $500,000 versus the CAPline product. If the new product makes it easier to borrow than the CAPLine product, more lenders might offer it.

Reply by a searcher
from Sophia University in The Woodlands, TX, USA

Has anyone successfully established a CAP LOC from the SBA for a Service based business ? (Ex.Consulting) ? I’d be curious to hear and would welcome a referral. I lost a businesa acquisition due to the SBA never quite getting their arms around not having assets to attach to with a Service Biz acquiring another Service Business…

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