In a significant move to bolster small businesses’ access to credit and spur economic growth, the U.S. Small Business Administration (SBA) launched the 7(a) Working Capital Pilot (WCP) Program in August of this year. Announced by SBA Administrator Isabel Casillas Guzman, this initiative opens new avenues for small businesses to secure competitively-priced lines of credit, aligning with President Biden’s Investing in America agenda.
Enhancing Access to Affordable Capital
Administrator Guzman emphasized the importance of affordable working capital for small businesses to seize growth opportunities. She highlighted the SBA’s efforts over the past three and a half years to expand access to capital and increase small-dollar lending. The new WCP program is a strategic extension of these efforts, designed to strengthen loan offerings and provide growth-oriented small businesses with the financial tools needed to scale their operations. “The Biden-Harris Administration continues to level the playing field, ensuring small businesses can compete, create jobs, and strengthen our nation’s economy,” said Guzman.
Flexible Loan Products for Diverse Needs
The Working Capital Pilot Program introduces a flexible loan product that meets the diverse needs of growth-oriented small businesses. By offering more options to SBA’s network of lenders, the program aims to provide businesses with a variety of credit lines structured to support their unique requirements.
The WCP program features an innovative fee structure and includes two primary loan types:
- Transaction-Based WCP: This loan type allows small businesses to fund individual projects or orders, enabling access to working capital earlier in the sales cycle. This flexibility supports businesses in managing cash flow and pursuing new opportunities without delay.
- Asset-Based WCP: Designed to provide a cost-effective way for small businesses to access working capital against their assets, this loan type helps businesses better manage their cash flow while supporting supply chain resiliency.
Speaking on the importance of accessible capital for small businesses, Brian Bond, Senior Vice President of Product & Strategy at Experian, remarked, “You’ve probably heard the saying, ‘It takes money to make money.’ This is especially true for cash-intensive businesses that occasionally need an influx of capital to seize new sales opportunities, prepare for the holiday rush, or pursue big, aspirational projects. By expanding the 7(a) loan program with the 7(a) Working Capital Pilot, the SBA has taken a significant step in offering a flexible way for businesses to access capital when they need it most. I encourage every SBA lender to take a close look at this program as another way to help their small business customers achieve their dreams.”
Supporting Small Businesses at Home and Abroad
The SBA remains committed to offering a range of updated products for small businesses to access working capital under the 7(a) Loan Program. These products include SBA Express loans, CAPLines, Export Loans, and the new WCP. Small businesses can visit the SBA’s Lender Match page to find participating SBA lenders that offer funding with competitive rates and fees.
For businesses engaged in the global marketplace, the WCP is tailored to support both domestic and international sales under one facility. Additionally, for companies participating in the Home Energy Rebate Programs funded by the Inflation Reduction Act, the WCP provides a new solution to help increase capacity and serve more homeowners with energy conversions.
Opportunities for SBA Lenders
Lenders approved to process 7(a) loans can begin processing 7(a) WCP loans starting August 1, 2024. Recognizing the specialized nature of this lending, the SBA has introduced a new type of delegated authority for WCP called Preferred Lender Program (PLP)-WCP. Lenders with existing delegated Export Working Capital Program (EWCP) authority will automatically receive delegated authority to make 7(a) WCP loans. Those without EWCP authority can apply for delegated 7(a) WCP status, following the requirements outlined in the Program Guide available on the SBA’s Training on Demand page.
The SBA encourages lenders to seek support from their local Export Finance Managers for personalized counseling and assistance with WCP projects. More details on the program can be found in the Program Guide and on the 7(a) Working Capital Pilot program webpage.
Standing in Solidarity with Small Businesses
At Experian, we understand the vital role small businesses play in driving economic growth and innovation. That’s why we are committed to empowering small businesses with the tools and insights they need to succeed. Our comprehensive business credit solutions help small business owners understand and manage their business credit effectively. By providing detailed business credit reports, monitoring services, and educational resources, Experian ensures that small businesses have the knowledge and support to make informed financial decisions. In standing with small businesses, we aim to foster a thriving economic landscape where every business has the opportunity to grow and prosper.
SBA Empowers Americas Small Businesses
The SBA’s 7(a) Working Capital Pilot Program represents a crucial step in empowering small businesses with the financial resources they need to thrive. By offering flexible, competitively-priced lines of credit, the program supports businesses in creating jobs, boosting sales, and driving economic growth. As part of the Biden-Harris Administration’s commitment to leveling the playing field, this initiative ensures that America’s small businesses have the tools they need to compete and succeed in a dynamic marketplace.
