An SBA CAPLines loan and a conventional bank line of credit both give a business a revolving line it can draw, repay and draw again, and both usually come from a bank. They differ in who qualifies, what the money may fund, how long the commitment lasts and how closely the lender watches the collateral. The comparison below uses SBA's rules as of October 6, 2026 and OCC examiner handbooks, with a worked cost example.
What an SBA CAPLine is and how the four types differ
CAPLines are a family of working-capital lines of credit within SBA's 7(a) program. SBA's types of 7(a) loans page calls CAPLines "an umbrella program that helps small businesses meet their short-term and cyclical working-capital needs." The detailed rules are in Section B, Chapter 4 of SOP 50 10 8.1, effective October 1, 2026 (both checked October 6, 2026). A bank or other SBA lender makes the loan, and SBA guarantees up to 85% of loans of $150,000 or less and up to 75% of larger ones.
| CAPLine | Who it's for | What it can fund | Limit worth knowing |
|---|---|---|---|
| Working Capital | A business that generates accounts receivable or has inventory | Short-term working capital and operating needs | Advances of up to 80% of eligible domestic receivables (90% for insured foreign and prime Federal contract receivables) and 50% of eligible inventory |
| Seasonal | In operation at least 12 calendar months with "a definite pattern of seasonal activity" | Seasonal increases in receivables and inventory, and in some cases added labor cost | Can't maintain activity during slow periods or refinance debt |
| Contract | A contractor that can show profitable completion of similar contracts | The costs of one or more specific contracts, including allocable overhead | No fixed assets, permanent working capital, mark-up or profit |
| Builders | A contractor or homebuilder building or rehabilitating property for resale | Direct construction costs of a specific project, with land limited to 33% of project cost | Each project repaid within 36 months of completion or at sale, whichever comes first |
A Working Capital, Contract or Seasonal CAPLine can have a maturity of up to 10 years, and a shorter line can be renewed as an extension of the same loan while the total revolving period stays within 120 months.
For seasonal inventory financing, a Seasonal CAPLine application needs month-by-month history of the seasonal need and a 12-month cash flow projection, and principal is due as soon as cash from seasonal sales comes in.
How a conventional bank line of credit is underwritten and secured
A conventional line is the bank's own product, so its credit policy sets the terms. The OCC's Accounts Receivable and Inventory Financing handbook (dated March 2000, as posted October 6, 2026) says revolver maturities are "usually from one to three years" and that a demand feature and other controls give the lender "considerable flexibility and control." Its newer Asset-Based Lending handbook (version 1.1, January 2017) adds that the maturity "is typically short term, which allows the bank to reevaluate the risks and adjust the loan terms," and that in a growing number of cases tenors run as long as five years.
The older handbook groups this lending by how much control the bank keeps over collateral. At one end is asset-based lending, where the lender uses a borrowing base formula, controls cash receipts and carries out field audits. At the other is blanket receivables lending, where "advances are not tied to borrowing-base formulas" and "controls are minimal." A small-business line secured by a general lien on business assets often works like the latter. Agreements "normally include financial covenants," and a traditional revolver may require a clean-up, typically "at least 30 consecutive days annually" at a zero balance.
Pricing, guarantees and fees are market practice. Banks commonly price a line at prime or another index plus a margin, often ask the owners of a closely held business for a personal guarantee, and may charge origination, annual or unused-line fees. No federal program sets those terms, so they vary by lender type.
SBA CAPLines loan vs. a conventional bank line of credit, side by side
| SBA CAPLine | Conventional bank line | |
|---|---|---|
| Who qualifies | An eligible small business that fits a CAPLine type and can't get some or all of the credit on reasonable terms from non-government sources | A business that meets the bank's credit policy |
| Maximum size | $5,000,000 | Set by the bank |
| Term | Up to 10 years (Builders: 60 months plus estimated construction time) | Typically short term, often with a demand feature |
| Rate | Negotiated under an SBA cap | Negotiated, no program cap |
| Collateral | Not required at $50,000 or less. Working Capital lines take a first lien on receivables and inventory, and sometimes equity in owners' personal real estate | Bank policy, often a lien on business assets |
| Guarantees | Unlimited personal guaranty from each individual owning 20% or more | Bank policy, commonly the owners |
| Fees | SBA upfront guaranty fee, plus lender fees SBA permits | Whatever the loan agreement says |
| Monitoring | Working Capital lines: borrowing base certificate required at $2,000,000 or more, field exams over $1,000,000 | Ranges from informal to full asset-based controls |
| Time to close | No SBA turnaround time listed for CAPLines. Lenders with delegated authority approve in house, others send the file to SBA | Depends on the bank |
Rate. The maximum variable rate is the base rate (prime or SBA's Optional Peg Rate) plus 3.0% on lines above $350,000, 4.5% from $250,001 to $350,000, 6.0% from $50,001 to $250,000 and 6.5% at $50,000 or less. With prime at 7.00% on October 1, 2026, per the Federal Reserve's H.15 release, the ceiling on a prime-based line above $350,000 approved in October 2026 is 10.00%.
Fees. Under SBA's FY 2027 fee notice, for loans approved October 1, 2026 through September 30, 2027, the upfront guaranty fee is 0.25% of the guaranteed portion when the maturity is 12 months or less. For longer maturities, the fee on the guaranteed portion is 2% for loans of $150,000 or less, 3% for $150,001 to $700,000, and above that 3.5% of the first $1,000,000 guaranteed plus 3.75% of the rest. Lenders may pass this fee to the borrower, and extending a short line past 12 months triggers an additional fee. Loans of $700,000 or less to manufacturers, listed food supply chain businesses and rural businesses carry a 0% upfront fee. The SOP bars commitment, origination, renewal and prepayment fees, though it permits reasonable packaging fees and out-of-pocket costs. It allows an extraordinary servicing fee for monitoring receivables and inventory only if the lender charges one on similar non-SBA loans, and no higher. That fee can't exceed 2% a year of the balance needing special servicing, except that a Working Capital CAPLine disbursed on a borrowing base certificate can be charged more.
What each line costs: a worked example
Take a wholesale distributor that wants a $500,000 line and expects to average a $300,000 balance for a year, with no SBA fee relief and prime at 7.00%. Every rate and lender fee below is an assumption, including a 1% monitoring fee on the balance (under the SOP's 2% cap) and no packaging fee. Only the 75% guaranty and the guaranty fee rates come from SBA's rules.
| Year-one cost | Conventional line | CAPLine, 12-month maturity | CAPLine, 5-year maturity |
|---|---|---|---|
| Assumed rate | 8.50% (prime + 1.50%) | 9.75% (prime + 2.75%) | 9.75% |
| Interest on $300,000 | $25,500 | $29,250 | $29,250 |
| Upfront fee | $2,500 (assumed 0.50% origination) | $937.50 (0.25% of the $375,000 guaranteed) | $11,250 (3% of the $375,000 guaranteed) |
| Other fees | $500 (assumed 0.25% unused fee on $200,000) | $3,000 (assumed 1% monitoring fee) | $3,000 (same) |
| Total | $28,500 | $33,187.50 | $43,500 |
On these assumptions the CAPLine costs $4,687.50 more in year one with a 12-month maturity and $15,000 more with a five-year maturity. The five-year guaranty fee is paid once, so from year two the same assumptions put the CAPLine at $32,250 a year.
As we read SBA's rule, a business offered the full conventional line on reasonable terms generally can't get the SBA one from the same lender, so the realistic comparison is often a smaller line, invoice factoring or an online lender.
Can a startup or new business get a CAPLine?
Three of the four types require a track record. A Seasonal CAPLine requires at least 12 calendar months in operation, and Contract and Builders CAPLines both require a record of completing similar work at a profit.
The Working Capital CAPLine's own test is that the business generates receivables or has inventory. For new businesses, the SOP has the lender base repayment on detailed projections that "reflect positive cash flow within 2 years," and the debt service coverage ratio must be at least 1.15 on a historical or projected basis. With no receivables or inventory there is nothing to advance against, and lenders can set stricter standards.
A smaller option is an SBA Express revolving line of up to $500,000, where the lender makes the credit decision. It can run up to 10 years including a term-out period, with no advances after the first 60 months.
When the SBA route is worth the extra paperwork
Our view at EQ Funding: ask for the conventional line first. If the bank approves the amount you need on reasonable terms, take it, because we expect it to cost less and involve less reporting in most cases.
Ask about a CAPLine when all of these are true:
- The bank declined, or offered too little, because of collateral, time in business or leverage.
- The need matches one of the four CAPLine types.
- You need a commitment longer than a one-year or demand line.
- You can produce agings, inventory listings and borrowing base certificates on schedule.
Equipment and other fixed assets belong on a term loan. Not every SBA lender offers CAPLines, so ask before you apply.
EQ Funding isn't a lender. One application goes to a network of lenders that compete for your business, so you can compare business line of credit and SBA loan offers. Approval and terms vary by lender.