SBA CAPLines: the revolving side of the 7(a) program
Most SBA borrowing is a term loan for a thing you are buying. CAPLines are for the money that never sits still: the receivables you are waiting on, the inventory you build before a season, the cost of performing a contract before the customer pays. Four types, one ceiling of $5,000,000, and a maturity that depends on which one you are in.
The thing that catches most owners out is that a Working Capital CAPLine is asset-based. You do not get the line you ask for. You get the line your eligible assets support, tested monthly.
Figures current as of August 2026
The four CAPLines, and which one you are in
CAPLines is an umbrella rather than a product. The four lines underneath it share the 7(a) rate ceilings, the $5,000,000 maximum and the guaranty, but they fund different things and they are underwritten differently. Picking the wrong one is the most expensive mistake available here, because a lender will not restructure a declined application; you start again.
TypeWhat it fundsMaturityStructure
Working CapitalAn asset-based revolving line against eligible receivables and inventory.For a business whose cash sits in the operating cycle. The lender advances against a borrowing base and re-tests it monthly.10 yearsRevolving
ContractThe cost of performing specific contracts, including allocable overhead.Repaid from the invoice when the customer pays. Not for permanent working capital, not for a contract already substantially underway.10 yearsEither
SeasonalThe seasonal build in receivables, inventory and sometimes labour.Requires the balance to reach zero for at least thirty consecutive days each year. That rule is the whole test.10 yearsEither
BuildersConstruction or rehabilitation of residential or commercial property for resale.For general contractors and homebuilders. An express exception to the general rule against financing investment property.5 yearsEither
The Builders exception
A Builders CAPLine runs five years, not ten. It is also the one place the SBA sets aside its general rule against financing investment property, because the property is inventory to a homebuilder rather than an investment. Both facts surprise people.
How a borrowing base actually works
On a Working Capital CAPLine the lender does not lend against your balance sheet. It lends against a filtered version of two lines on it, and the filtering happens first.
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Start with the gross balances — Accounts receivable and inventory at cost, as of the reporting date.
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Strip out the ineligibles — Invoices past ninety days, related-party and intercompany balances, foreign receivables without credit insurance, contra accounts, and the portion of any single customer above the concentration limit. On inventory: work in progress, obsolete stock and anything held on consignment.
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Apply the advance rate to what survives — Eighty percent against eligible receivables and fifty percent against eligible inventory is ordinary practice. Neither number is set by the SBA.
04
That total is your line, tested monthly — You certify the base each month, and the availability moves with it. A quarter where collections slip is a quarter where the line shrinks.
Where the leverage is
Owners spend their negotiating energy on the advance rate and almost none on eligibility. That is backwards. Ineligibles come out before any rate is applied, so collecting a past-due invoice or reducing a concentration raises the base by the full amount, where arguing five points of advance rate raises it by a fraction of the same money.
The CAPLines calculator works this through with your own figures and shows which of the three constraints is actually binding: the base, the program ceiling, or what you asked for.
What it costs
CAPLines price like any other 7(a) loan: a base rate plus a spread the lender negotiates, under a ceiling the SBA sets. The ceiling is tiered by loan size, not by maturity — maturity stopped affecting it in 2022, which is a change older articles still get wrong.
Loan sizeMaximum spreadCeiling at 6.75%
$50,000 and under+6.5013.25%
$50,001 to $250,000+6.0012.75%
$250,001 to $350,000+4.5011.25%
Above $350,000+3.009.75%
Ceilings are over the base rate. WSJ Prime was 6.75% as of August 2026 and moves with the FOMC; lenders may also use the SBA optional peg rate or SOFR. These are maximums, not quotes.
The costs that are not the rate
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The upfront guaranty fee — Charged on the guaranteed portion, on a schedule that changes by fiscal year. Fees returned under the current SOP after a period of waivers, so anything written before mid-2025 is unreliable on this point.
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An annual service fee — Charged on the outstanding guaranteed balance.
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Field examinations — An asset-based line is monitored. Expect periodic examinations of your receivables and inventory, billed to you.
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Monthly borrowing base certificates — Real work for whoever keeps your books, every month, forever.
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Lockbox or dominion of funds — Some lenders route your collections through an account they control. It is normal in asset-based lending and it surprises owners every time.
Collateral, guarantees and the credit standard
SOP 50 10 8, effective 1 June 2025 tightened this materially, and it is the current rulebook. Collateral is now required on essentially every loan above $50,000, down from a $500,000 threshold under the previous edition. Every owner of twenty percent or more signs a personal guarantee.
The rule worth knowing
A lender cannot decline an otherwise eligible loan solely because it is under-collateralised. Very few borrowers are fully secured on the SBA's discounted values, and the SBA knows it. If you are told your application fails on collateral alone, that is a lender policy talking, not the SOP.
The same revision restored a ten percent equity injection for start-ups and changes of ownership, raised the minimum business credit score, and ended what the SBA itself called the "do what you do" era of lender discretion. If you were quoted terms before June 2025 and are only now applying, expect a different conversation.
When a CAPLine is the wrong facility
This is the section most lenders will not lead with, and it saves the most time. A CAPLine is wrong for you if any of the following is true.
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Your balance would never reach zero — A seasonal line must sit at zero for at least thirty consecutive days a year. If your cash never allows that, the need is permanent working capital, and that is a term loan.
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You want to draw it and leave it drawn — Evergreen lines are not permitted here. Interest-only until maturity on a fully drawn line is a term loan wearing a costume, and the SBA will treat it as one.
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You are buying equipment or property — Fixed assets belong in a term loan or a 504, not on a revolving line. Financing a long asset on a short facility is how businesses end up refinancing under pressure.
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You need the money in a fortnight — Asset-based underwriting takes longer than a term loan. If speed is the binding constraint, look at SBA Express, which trades ceiling and guaranty for a thirty-six hour SBA response.
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You are refinancing overdue tax or existing debt — Not an eligible use under the contract line, and heavily restricted elsewhere.
If speed matters more than size, the SBA Express guide covers the trade directly: a smaller ceiling and half the guaranty in exchange for an answer inside thirty-six hours.
Questions
Find out what your assets actually support
The calculator builds the borrowing base from your own receivables and inventory, then shows which constraint is binding and what the line costs to carry.