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  • Writer's pictureAmi Kassar

AmiSight 6/10: SBA Hopes to Simplify the Lending Process with a New Program

In an effort to broaden its flagship lending program, the Small Business Administration is launching a new working capital pilot program in the coming months that is designed to be more attractive to both lenders and borrowers than the agency’s existing products.

 

The new government-backed credit lines will be up to $5 million for small businesses, SBA Administrator Isabel Casillas Guzman told CNBC

 

“This product is our aim to increase access to a simpler working capital line,” she said. “It basically takes the best of our various options to create a pilot program to see if we can get more borrowers an affordable working capital line versus just a pure reliance on credit cards” or other capital sources.

 

The 7(a) loan program, in which the SBA provides guarantees to lenders to encourage them to extend loans to small business owners, has less interest among lenders and business owners than the agency had hoped, Guzman said.

 

The SBA’s new working capital lines will have an annual fee and maximum interest rates based on the prime rate plus 3% to 6.5%, which would be roughly 12% to 15% today, according to the agency. They will allow small business owners to either fund specific projects or borrow against their assets.


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