Working Capital: How to Choose the Best SBA Funding Option for Your Business

Working capital is the lifeblood of small business. Without it, a company can struggle to cover short-term obligations. While accounts receivables are collected over short periods of time, companies require quick access to cash to make payroll, pay vendors and cover expenses. All too often, there’s a gap between the two, putting a strain on the business’ ability to operate successfully.

Working capital can be secured through loans, lines of credit or investors. If your business doesn’t qualify for a traditional line of credit, you may want to look to the U.S. Small Business Administration (SBA).  

As an SBA Preferred Lender, we know these options well. Over 97 percent of businesses nationwide fall within the SBA’s size standards, which are based upon several different tests. While your lender will guide you through the qualifications, here’s an overview of the key programs to consider:

SBA 7(a) term loan 

This loan can be used for a variety of purposes, including permanent working capital. With terms up to 10 years, it can be advantageous for fueling growth or initiatives that cannot be completed during a business’ normal cash cycle. 

SBA Express lines of credit

Flexible enough to be used for a variety of purposes, the Express line of credit is best when you need capital fast. In fact, you can get a decision within 36 hours of applying. The maximum amount is $500,000 with a 10-year term. Up to half the term is used as a line of credit and the other half to amortize any remaining balance. And, if your business is an exporter, ask about the tailored Export Express program to assist you in growing market abroad. Learn more about the SBA Express Loan at Banner.

Working Capital CAPLine

This line of credit is good for short-term working capital needs. It mirrors a traditional asset-based line of credit and can be up to $5 million. It allows for more generous advance rates as well as potential workarounds to key limitations, including concentration maximums. The max term is 10 years with annual renewals. 

Working Capital Pilot  

In 2024, the SBA launched a Working Capital Pilot Program. It combines some of the key features of the CAPLine with the Export Working Capital Program. Under this pilot, you can access working capital for borrowing-based advances, transaction-specific needs, government contract financing, certain eligible refinancing and for other miscellaneous purposes. Conveniently, the program allows for domestic and export-related working capital needs. Best of all, it boasts a fee structure among the lowest the SBA has to offer. 

Remember all businesses need working capital, and it’s common to seek funding to help you cover day-to-day needs. To learn more about SBA financing, see our blogs Five Tips When Considering an SBA Loan or What to know before applying for an SBA 7(a) or 504 loan, or reach out to us. As an SBA-Preferred Lender, our bankers are experts at helping you consider all your options.