****SBA****
****U.S. Small Business Administration****

**The Facts About ...****CAPLines****Working Capital Loan Program**
CAPLines is the U.S. Small Business Administration'sumbrella lending program that helps small businesses meettheir short-term and cyclical working-capital needs.CAPLines can be used to:-     Finance seasonal working-capital needs;     Finance the direct costs of performing construction,        service and supply contracts;    Finance the direct cost associated with commercial and
        residential construction without a firm commitment for
        purchase; and
-     Finance operating capital by obtaining advances against          existing inventory and accounts receivable.   There are five distinct short-term working-capital loanprograms under the CAPLines umbrella including: **Seasonal Line**
Finances anticipated needs during seasonal upswings in thebusiness cycle. Repayment is made from the sale of inventoryand collection on receivables created during the season. TheSeasonal Line can be revolving or nonrevolving.
**Contract Line**
Finances the direct labor and material costs associated withperforming assignable contract(s). One contract line canfinance more than one contract.
**Builders Line**
Finances the direct labor and material costs for small generalcontractors and builders that construct or renovate commercialor residential buildings. The building project serves as thecollateral; Builders Line loans can be revolving or nonrevolving.
**Standard Asset-Based Line**
Provides financing for cyclical, growth and recurring short-term needs by advancing funds against existing inventory andaccounts receivable. Repayment comes from converting short-term assets into cash and remitting this cash to the lender.Businesses continually draw and repay as their cash cycledictates. This line of credit is generally utilized bybusinesses that provide credit to other businesses. Theseloans require periodic servicing and monitoring ofcollateral, for which additional fees are usually charged bythe participating bank.
**Small Asset-Based Line**
Provides up to $200,000 under an asset-based revolving lineof credit similar to the Standard Asset-Based Line, exceptthat some of the stricter servicing requirements are waived(provided that the business can consistently show repaymentability from cash flow for the full amount).
**Loan & Guaranty Amount**
All CAPLines are only provided on a guaranteed basis and canbe for any dollar amount except for the Small Asset-Basedloan, which is limited to $200,000. However, the maximum SBAguaranty share is limited to $750,000 or 75 percent,whichever is less.
**Loan Maturity & Disbursement**
Each of the five lines of credit has a maturity of up tofive years. However, to meet the needs of the applicant, ashorter initial maturity can be established. CAPLines fundsmay be used as needed throughout the term of the loan topurchase short-term assets, as long as sufficient time isallowed to convert the assets into cash by maturity.
**Collateral**
The primary collateral will be either the current assets tobe acquired with the loan proceeds or the current assetsserving as a base for disbursements. Personal guarantieswill also be required from the principal owners of thebusiness.
**Credit Requirements**
Loan applicants must:-     Demonstrate the capability to convert short-term assets        into cash;     Demonstrate sufficient management ability, experience        and commitment necessary for a successful operation;    Demonstrate the capability to perform, and collect        payment for that performance;
-     Have a feasible business plan;     Have adequate equity or investment in the business;    Have the capability of providing required updates on        the status of current assets;
-     Pledge sufficient assets to adequately secure the loan;        and     Be of good character.
**Guaranty & Service Fees**
A guaranty fee is paid by the lender and is usually passedon to the borrower. On loans with maturities of up to oneyear, the fee is 0.25 percent. On loans where the guaranteedportion is $80,000 or less with maturities of more than oneyear, the guaranty fee is 2 percent of the guaranteedportion. On loans where the guaranteed portion exceeds$80,000 with maturities of more than one year, the guarantyfee is figured on an incremental scale. The lender also maycharge a servicing fee no greater than 2 percent of theoutstanding balance on an annual basis for all CAPLinesloans except the Standard Asset-Based loan, where there areno fee restrictions.
**Interest Rates**
The rate of interest will be negotiated between the borrowerand the lender, but cannot exceed the prime rate plus 2.25percent.
**For More Information**
Information is power. Make it your business to know what isavailable, where to get it and, most importantly, how to useit. Sources of information include:**U.S. Small Business Administration**-     SBA District Offices     SBA OnLine (electronic bulletin board)    Business Information Centers (BICs)*
-     One-Stop Capital Shops (OSCSs)*     Service Corps of Retired Executives (SCORE)*    Small Business Development Centers (SBDCs)*
-     U.S. Export Assistance Centers (USEACs)*     Women's Business Centers (WBCs)*        *    Inquire at your local SBA office for the location              nearest you.The SBA has offices located throughout the United States.For the one nearest you, look under "U.S. Government" inyour telephone directory, or call the SBA Answer Desk at1-800-U-ASK-SBA. To send a fax to the SBA, dial 202-205-7064. For the hearing impaired, the TDD number is 704-344-6640. For information on your rights to regulatory fairness,the telephone number is 1-800-REG-FAIR.To access the agency's electronic public informationservices, you may contact:**SBA OnLine:** electronic bulletin board (modem and computerrequired)-    1-800-697-4636 (limited access)     1-900-463-4636 (full access)    202-401-9600 (D.C. metro area)
Internet:
 using uniform resource locators (URLs)
    SBA home page: www.sba.gov
-     SBA gopher: gopher.sba.gov     File transfer protocol: ftp.sba.gov    Telnet: telnet.sba.gov
-     U.S. Business Advisor: www.business.gov You also may request a free copy of The Resource Directoryfor Small Business Management, a listing of for-salepublications and videotapes, from your local SBA office orthe SBA Answer Desk. **Other Sources of Information**-     State economic development agencies     Chambers of commerce    Colleges and universities
-     Libraries     Manufacturers and suppliers of small business products        and services    Small business or industry trade associations
**Did you know that in fiscal year 1997 the SBA -**
    maintained a guaranteed-loan portfolio of more than        $29 billion in loans to 200,000 small businesses that        otherwise would not have had such access to capital?
-     backed over 49,400 loans totaling a record $10.9        billion to America's small businesses?     made a record 2,700 investments worth $2.37 billion         through its venture capital program?    provided 50,000 loans totaling $1.1 billion to disaster        victims for residential, personal-property and business losses?
-     extended management and technical assistance to nearly        900,000 small businesses through its 12,400 Service Corps of        Retired Executive volunteers and approximately 1,000 small business             development center locations?     assumed a leadership role in the President's Welfare-to-Work        Initiative by encouraging entrepreneurship and linking small        businesses with potential employees?**Did you know that America's 23 million small businesses -**-     employ more than 50 percent of the private workforce,     generate more than half of the nation's gross domestic         product, and    are the principal source of new jobs?
All of the SBA's programs and services are provided to thepublic on a nondiscriminatory basis.
FS-0064 (05/98)
* Last Modified: 7/03/01