CAPlines: Seasonal Lines of Credit

April 13, 2006

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The CAPlines seasonal lines of credit are SBA guaranteed short-term loans that help small businesses get past cash crunches attributable to seasonal changes in business volume. The loans are used to finance increases in assets, such as receivables and inventory, required as a result of seasonal upswings in business.

To qualify for a seasonal line of credit guarantee, a small business must meet the general criteria for SBA loan guarantees. In addition, the business must have been in operation continuously for one year immediately preceding the application date, and it must have established a definite pattern of seasonal activity. The term of the seasonal line of credit loan cannot be more than 12 months from the date of the SBA's first disbursement. Only one seasonal line of credit loan can be outstanding at any one time and each loan must be followed by a debt-free period of at least 30 days. These restrictions do not apply to agricultural enterprises.