(Updated July 18, 2024)
Official notice of the SBA 7(a) Working Capital Pilot Program (WCP), with a request for comments, was posted in the Federal Register on July 15 [89 FR 57353]. The comment period will close on August 14. Please see the NAGGL news item dated July 12, and the referenced notice, for complete information on the new pilot program.
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Notice of the previously announced SBA 7(a) Working Capital Pilot Program (WCP), with a request for comments, was posted in the Federal Register reading room on July 12 (reference 2024-0005). The official document is expected to be published on July 15, and the comment period will close 30 days after the actual date of publication.
The three-year WC Pilot will take effect on August 1, 2024, and, unless extended, or made permanent, is scheduled to end on July 31, 2027. Under the pilot, all 7(a) lenders in good standing will be able to provide WCP Lines of Credit (LOCs). But only lenders currently holding PLP-EWCP delegated authority will receive automatic delegated authority for WCP LOCs. Other lenders may apply for delegated authority in accordance with the requirements contained in SOP 50 56 1, Lender Participation Requirements and other WCP-specific guidance.
The WCP authorizes lenders to make both asset-based and transaction-based WCP 7(a) lines of credit (LOCs) in amounts up to $5 million, with the lines available to support both domestic and international transactions. The maximum LOC term will be 60 months (5 years), and SBA’s standard maximum guaranties of 85% for loans of $150,000 and 75% for loans of $150,000 and over will apply. The standard regulatory maximum interest rates also will apply; but, in addition to the usual Prime and Optional Peg Rates allowed for other 7(a) loans, under the pilot, SBA also will allow lenders to use the Secured Overnight Financing Rate (SOFR) plus 3 percent as a base rate for WC Pilot LOCs. The upfront fee (guaranty fee) is modeled on SBA’s Export Working Capital Program (EWCP) which “operates as a function of time, charging a proportional amount for each year the facility is in use”.
SBA intends to issue a Program Guide to provide more detailed guidance on the WCP. As with all pilot programs, except where specifically amended for this pilot, all regulatory, SOP and other 7(a) Program Requirements will apply.
Please see the Federal Register Notice for complete information about the WCP, including details relating to the regulations that are being waived under this pilot. NAGGL will provide additional information as it becomes available.
