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SBA to Launch $5 Million Credit Lines for Small Businesses: Aiming to Boost Working Capital Accessibility

The U.S. Small Business Administration (SBA) plans to introduce new government-backed credit lines of up to $5 million for small businesses, aiming to provide accessible and affordable working capital.

SBA Administrator Isabel Casillas Guzman revealed the upcoming working capital pilot program, designed to be more appealing to both lenders and borrowers than existing SBA products.

Guzman highlighted the challenge small businesses face in securing working capital for projects like infrastructure development or expanding orders.

SBA’s new $5 million credit lines aim to simplify access to affordable working capital for small businesses.

The SBA’s flagship lending program, the 7(a) loan program, saw over 57,000 loans worth $27.5 billion last year, primarily for amounts under $350,000.

However, their efforts for revolving lines of credit, such as the SBA Express loan, have seen less uptake due to less appealing terms for lenders.

The new working capital lines will feature annual fees and maximum interest rates based on the prime rate plus 3% to 6.5%, offering a more affordable option than credit cards or other capital sources.

Loans over $150,000 will have a 75% guarantee, while smaller loans will have an 85% guarantee.

Guzman encouraged interested business owners to apply through the SBA’s website or pre-screening lender platform once the program launches.

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