--- title: "Short-Term Working Capital Loan: SBA CAPLines and Alternatives" description: When you need short-term funding or revolving loans to obtain working capital, the SBA CAPLines program may be able to help. image: https://smartbizbank.com/hubfs/Imported_Blog_Media/sba-caplines-2-1-2.jpg --- - [Share](https://smartbizbank.com/blog/short-term-working-capital-loan-sba-caplines-and-alternatives#) - - - - [mailto:?subject=Check%20out%20https://smartbizbank.com/blog/short-term-working-capital-loan-sba-caplines-and-alternatives](mailto:?subject=Check%20out%20https://smartbizbank.com/blog/short-term-working-capital-loan-sba-caplines-and-alternatives) # Short-Term Working Capital Loan: SBA CAPLines and Alternatives August 29, 2022 By [Max Freedman ](https://smartbizbank.com/blog/author/max-freedman) If your small business needs funding, a short-term loan can help. A revolving credit line might help too. The SBA CAPLines loan program offers both these options. Other types of short-term working capital loans are also available. Learn more about them below. [![See if you pre-qualify](https://no-cache.hubspot.com/cta/default/21458256/3d216d78-601b-4bc6-b9d5-3df52894e921.png)](https://cta-redirect.hubspot.com/cta/redirect/21458256/3d216d78-601b-4bc6-b9d5-3df52894e921) ## What are SBA CAPLines loans? SBA CAPLines loans are working capital loans to cover cyclical or short-term needs. You can obtain them as [revolving or installment loans](https://smartbizbank.com/blog/is-a-small-business-loan-installment-or-revolving) or as [business lines of credit](https://smartbizbank.com/blog/small-business-lines-of-credit-pros-cons). You can also secure several CAPLines loans at once. If you do, the total portion of your loan amounts that the SBA guarantees must be $3.75 million or less. The SBA divides CAPLines loans into four categories based on the type of small business or use case, such as seasonal businesses, homebuilders, contractors, subcontractors, and construction contractors. ## 4 different SBA CAPLines Loans The SBA CAPLines program includes four different types of loans. Note that all four options outlined below offer loans up to $5 million and repayment terms of up to 10 years. One exception: You must repay Builders CAPLines loans within five years. All four loans also require you to meet all [SBA 7(a) loan eligibility requirements](https://smartbizbank.com/sba-requirements-eligibility). ### 1. Working Capital CAPLine The SBA recommends a Working Capital CAPLine loan if you sell on credit and can’t otherwise obtain revolving financing. Your small business can qualify if it generates accounts receivable or keeps inventory. If your application is approved, you’ll receive a business credit line and can use your funds for any short-term operational expenses and [working capital](https://smartbizbank.com/blog/what-is-working-capital) needs. You cannot use your loan to cover late withholding taxes, state sales taxes, or similar trust funds. [Floor planning](https://www.investopedia.com/terms/f/floor-planning.asp) is also not an acceptable funds use. ### 2. Seasonal CAPLine A Seasonal CAPLine loan can connect seasonal business owners with financing they might otherwise struggle to obtain. Your business may qualify if it can clearly demonstrate seasonal business activity patterns. You’ll also need at least one year in business to qualify. You can use your funds to pay for seasonal increases in [inventory](https://smartbizbank.com/blog/inventory-to-sales-ratio-things-to-know) or accounts receivable. In some cases, you can also cover the labor costs associated with your inventory. However, you cannot use your funds to sustain your business during slow periods. ### 3. Contract CAPLine The SBA Contract CAPLine program is designed to connect contractors and subcontractors with funding they might not find elsewhere. This program usually involves installment loans, though revolving options are available. To qualify, you must show that you can complete the contract profitably based on similar previous contracts. You must also be able to bid and perform all the work detailed in your current contracts. Additionally, you must have the financial resources and technical know-how to fulfill the contract profitably and on time. You can use Contract CAPLine funds to cover one or several contracts, subcontracts, or purchase orders. You can also use them to cover overhead, general, and administrative expenses as long as these costs are allocable to your contractors. No other uses are allowed. ### 4. Builders CAPLine The SBA Builders CAPLine is intended for residential and commercial builders. You must be a homebuilder or construction contractor who can demonstrate technical and managerial ability to qualify. You must also perform the building work or manage it while keeping one supervisory employee on-site during construction. Prompt and significant renovations are a must for these loans, as is prior success bidding and completing construction and renovation projects. As with Contract CAPLines, Builders CAPLines can be installment or revolving. You can use your loan to cover the direct business expenses of your construction. Alternatively, you can cover any significant costs pertaining to a residential or commercial building resale project. These use cases mean that your loan can potentially go toward labor, equipment rentals, building permits, utility connections, and even septic tanks. You may also be able to use your loan for building permits, inspection fees, materials, and supplies. Land that costs less than 20 percent of your project cost may qualify as an eligible expense as well. Unlike other SBA CAPLines, you’ll have five years, at most, to repay a Builders CAPLine loan. In most cases, you’ll have to repay your funds within three years of selling the property or completing the project – whichever is sooner.   ## Other short-term working capital loans A relatively small number of small business owners can qualify for SBA CAPLines loans. If you are not one of them, you can likely still find other short-term loans to cover your daily operations, [payroll](https://smartbizbank.com/blog/ways-to-manage-small-business-payroll-options) costs, and more. Options include the short-term working capital loans listed below. - ### Business lines of credit You can borrow against a business line of credit when you find you need funds rather than immediately receiving the whole amount. You’ll only pay for the funds you use. Think of it like a business credit card with a higher credit limit with two main differences. Some business lines of credit become inaccessible after a certain period, and only credit cards offer cash back rewards. Business lines of credit are useful when you’re buying inventory, repairing or purchasing equipment, covering payroll, or starting marketing campaigns. You can likely qualify without a great [credit score](https://smartbizbank.com/blog/loan-applications-understanding-your-fico-liquidcredit-score), and funding is typically available quickly. Credit line fees, though, start high and typically increase over time. - ### Online alternative lenders Certain lenders that position themselves as [alternatives to traditional financial institutions](https://smartbizbank.com/blog/short-term-working-capital-loan-sba-caplines-and-alternatives) offer rapid-turnaround working capital loans. However, more often than not, these favorable terms come with high interest fees that can quickly make your loan unaffordable. Their short terms can make your monthly repayment amounts high as well. The combination of high repayment amounts and interest rarely bodes well for a business that needs to affordably cover its expenses. - ### Merchant cash advances Merchant cash advances are a lump sum that you obtain and then repay nearly automatically. Once a merchant cash advance provider issues your funds, they will then set up automatic daily deductions from your credit or debit card income. Loan amounts can range from $5,000 to $500,000, though the interest rates can be exorbitant. Merchant cash advances typically rank as the most expensive way to fund your business. - ### Invoice financing and factoring Invoice factoring and financing are loans that correspond to your accounts receivable. You’ll receive cash equal to 80 to 90 percent of your total accounts receivable from a lender. Once you’ve converted your accounts receivable to cash, a small portion of your new cash will go to the lender as a fee. Notably, in invoice factoring, the lender overtakes your collections, whereas you still handle collections in invoice financing. Invoice financing and factoring are among the fastest ways to get funding, and they’re also low-risk. You can probably repay these loans since they’re based on money clients owe you. But if your clients fail to repay you, especially over extended periods, invoice financing and factoring may become very expensive. ## How to qualify for short-term working capital loans To qualify for short-term working capital loans, you’ll need a credit score of at least 530. In most cases, though, a score of 600 or greater will take you further. You’ll also likely qualify for more short-term working capital loans if your business has operated for at least a year (sometimes two). For SBA CAPLines, additional SBA 7(a) application criteria such as U.S. citizenship and being up-to-date on government loans may apply. And for some loans, you may need to present a [business plan](https://smartbizbank.com/blog/businessplans-businessloans) – but not when you seek funding through SmartBiz®. ## Apply for short-term working capital loans through SmartBiz If business lines of credit and invoice financing appeal to you as short-term working capital loan options, you can obtain them through SmartBiz. [Check now whether you pre-qualify](https://smartbizbank.com/apply)* for these custom financing options. If you do, additional loan options such as [bank term loans](https://smartbizloans.com/bank-term-loans) and the especially popular [SBA 7(a) loan program](https://smartbizloans.com/sba-loans) may also be on the table. Whatever your business goals may be SmartBiz can help connect you with the capital you need – and the people who can get it for you.   ![Q3 Promo E1](https://smartbizbank.com/hubfs/Q3%20Promo%20Email%20Images/Q3%20Promo%20E1.png) ### Access Funds Quickly Apply for a Bank Term Loan from a bank in our trusted network [![See if you pre-qualify](https://no-cache.hubspot.com/cta/default/21458256/08df270b-4561-4437-a5aa-11d47ef08efb.png)](https://cta-redirect.hubspot.com/cta/redirect/21458256/08df270b-4561-4437-a5aa-11d47ef08efb) - [Follow SmartBiz](https://smartbizbank.com/blog/short-term-working-capital-loan-sba-caplines-and-alternatives#) - - - - - ### Access to the right loan for right now We’re connecting small businesses with SBA, bank term loans, lines of credit, and flexible financing options. [![See if you pre-qualify](https://no-cache.hubspot.com/cta/default/21458256/08df270b-4561-4437-a5aa-11d47ef08efb.png)](https://cta-redirect.hubspot.com/cta/redirect/21458256/08df270b-4561-4437-a5aa-11d47ef08efb) ##### Topic - [Business Loans](https://smartbizloans.com/blog/tag/business-loans) - [Business Stories](https://smartbizloans.com/blog/tag/business-stories) - [Marketing](https://smartbizloans.com/blog/tag/marketing) - [Money Management](https://smartbizloans.com/blog/tag/money-management) - [Operations](https://smartbizloans.com/blog/tag/operations) ## Related Posts [ See all blog posts ](https://smartbizbank.com/blog) [Money Management July 01, 2026 ## How to Reforecast Your Budget Based on Summer Trends When you built your company’s budget for this year, you no doubt looked at past data. However, there were probably also some future projections that... Read More ](https://smartbizbank.com/blog/reforecast-your-budget-with-summer-trends-smartbiz-bank) [Money Management June 24, 2026 ## The Counterintuitive Truth About Summer Slowdowns For many small business owners, summer is an uncomfortable time of year. Many consumers travel or spend more time at home, which typically leads to them making fewer... Read More ](https://smartbizbank.com/blog/do-less-this-summer-to-grow-your-business-smartbiz-bank) [Money Management June 22, 2026 ## Small Business Revenue: Determine Where You Stand As a business owner, regularly reviewing your annual revenue gives you a clear picture of your company’s current health and helps you evolve your business strategically so... Read More ](https://smartbizbank.com/blog/small-business-revenue-determine-where-you-stand) ### Smart growth is smart business ## Access to the right loan for right now See if you pre-qualify, without impacting your credit score. 1 [ Apply Now ](https://smartbizbank.com/apply) 1. We conduct a soft credit pull that will not affect your credit score. However, in processing your loan application, SmartBiz Bank and the lenders with whom we work will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may impact your credit score. The SmartBiz® Small Business Blog and other related communications from SmartBiz BankSM are intended to provide general information on relevant topics for managing small businesses. Be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed. Please consult legal and financial professionals for further information. ```json { "@context" : "https://schema.org", "@type" : "Blog", "blogPost" : [ { "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "SmartBiz Bank Editorial Team" }, "dateModified" : "2024-01-15", "datePublished" : "2024-01-15", "description" : "Learn how SBA loans can provide the capital and flexibility small businesses need to expand operations, hire staff, and invest in growth.", "headline" : "How SBA Loans Can Help Your Small Business Grow", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://smartbizbank.com/wp-content/themes/smartbiz/assets/images/logo.svg" }, "name" : "SmartBiz Bank" }, "url" : "https://smartbizbank.com/blog/sba-loans-help-small-business" }, { "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "SmartBiz Bank Editorial Team" }, "dateModified" : "2024-02-05", "datePublished" : "2024-02-05", "description" : "Tips and strategies for small business owners to strengthen their SBA loan applications and increase approval chances.", "headline" : "5 Tips for Improving Your SBA Loan Approval Chances", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://smartbizbank.com/wp-content/themes/smartbiz/assets/images/logo.svg" }, "name" : "SmartBiz Bank" }, "url" : "https://smartbizbank.com/blog/sba-loan-approval-tips" } ], "description" : "The SmartBiz Bank Blog provides insights, tips, and guidance for small business owners on SBA loans, business financing, and financial strategies to grow their companies.", "inLanguage" : "en", "mainEntityOfPage" : { "@type" : "WebPage", "url" : "https://smartbizbank.com/blog" }, "name" : "SmartBiz Bank Blog", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://smartbizbank.com/wp-content/themes/smartbiz/assets/images/logo.svg" }, "name" : "SmartBiz Bank", "url" : "https://smartbizbank.com" }, "url" : "https://smartbizbank.com/blog" } ```