SBA makes it easier for small businesses to get credit

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Hannaher

The U.S. Small Business Administration has made changes in its lending program that makes it easier for small businesses to get a line of credit, said Dan Hannaher, who oversees Region VII, which includes Colorado.

The newly reworked CAPLines program gives small businesses more flexibility to finance contracts, subcontracts and purchase orders, Hannaher said. The program addresses the short-term and cyclical working capital needs of small businesses. It’s a program that can help small businesses manage their cash cycle, he said.

“I think this is going to be a really big deal,” he said.

CAPLines was an existing program, but it was hardly used, Hannaher said. When SBA asked about 150 banks about it, they said the program was cumbersome and there was too much paperwork to make it worthwhile. The program, Hannaher said, was reconfigured to match a more conventional line of credit.

One of the growing pains small businesses face when going after new contracts is the business often does not have the necessary cash to hire workers and buy materials to fill an order. Under this program, a business can use the purchase order request as collateral to get the line of credit.

The line of credit can be used by small business subcontractors doing work for a contract with a federal prime contractor. And, SBA no longer requires small business owners without buildings or equipment to use their personal assets as collateral to secure working capital.

A key change, Hannaher said, is that small businesses that use CAPLines have a $5 million loan limit, which went into affect with the Small Business Jobs Act of 2010.

“These larger loan sizes will help small businesses that are poised to win bigger contracts and create a significant number of jobs,” he said.