Unlocking New Growth: How the 7(a) Working Capital Pilot Program is Changing the Game for Manufacturing Finance

For finance leaders in the middle-market manufacturing space, access to capital can be the make-or-break factor in scaling operations, fulfilling large contracts, or simply keeping cash flow steady. Enter the SBA’s 7(a) Working Capital Pilot Program (WCP)—a fresh take on working capital financing that brings flexibility and ease to small and midsized manufacturers who need it most.

What’s the Deal with the 7(a) Working Capital Pilot?

The WCP is a brand-new pilot program under the SBA’s 7(a) umbrella, and it’s a big deal because it’s the first major update to the 7(a) loan family in over a decade. The program is designed specifically to help businesses manage short-term working capital needs, whether for domestic or international transactions. Think of it as a revolving line of credit that actually works for manufacturers, offering loan guarantees of up to 75% on credit lines up to $5 million.

What makes this program stand out? The WCP offers:

• A flexible annual guarantee fee structure (modeled after the Export Working Capital Program)
• Both asset-based and transaction-based lending options
• Support for government contracts and export financing
• A streamlined process that allows lenders to customize terms based on borrower needs

Two Ways to Tap into WCP Financing

1. Transaction-Based Lending – Perfect for manufacturers with large contracts who need cash upfront to cover materials, production, and labor. This structure allows businesses to secure funding against upcoming transactions, rather than waiting on invoice payments.
   1. Example: A small engineering firm lands a multimillion-dollar contract but needs funds to start production before the first payment comes in. A transaction-based WCP line lets them borrow against the contract, bridging the gap between production costs and customer payments.
2. Asset-Based Lending – A great fit for companies looking to leverage accounts receivable and inventory as collateral. The WCP allows manufacturers to borrow up to 85% of domestic receivables and 60% of inventory value.
   1. Example: A medical device company facing supply chain challenges builds up excess inventory to avoid stockouts. They use an asset-based WCP line to free up liquidity without depleting cash reserves.

Why Should Manufacturing Leaders Care?

Most middle-market manufacturers operate on tight cash flow cycles. Traditional credit options often don’t align with the real-world needs of growing manufacturers—where large orders, milestone payments, and long production timelines make financing tricky. The WCP brings some much-needed breathing room by allowing companies to access capital sooner and repay flexibly.

Some Key Advantages for Finance Managers:

• Lower upfront costs – For loans under $1M, the WCP has a 0% upfront guaranty fee
• Annual renewal options – No need to reapply for new loans every year; businesses can extend WCP lines in 12-month increments
• Government-backed security – With SBA guarantees up to 75%, lenders are more willing to offer competitive terms

How It Stacks Up to Other SBA Loan Programs

If you’ve worked with the CAPLine or Export Working Capital Program (EWCP) before, the WCP will feel familiar. But here’s the key difference: it combines the best parts of both programs—like CAPLine’s domestic flexibility and EWCP’s annual guarantee structure—without the red tape that often slows down SBA-backed lending.

Check out this cost comparison for a $1.4M line of credit:

Program	Year 1 fee	Year 2 fee
WCP (75% guarantee)	$2,625	$2,887.50
EWCP (90% guarantee)	$3,150	$3,465
CAPLine (75% guarantee)	$2,625	$34,875

For manufacturers who’ve struggled with the upfront fees and administrative burden of SBA lending, the WCP presents a more manageable and predictable cost structure.

Finance leaders looking to take advantage of the WCP should start by:

1. Assessing working capital needs – Is transaction-based or asset-based lending a better fit?
2. Connecting with SBA-approved lenders – Not all banks are on board with the WCP yet, so work with a lender experienced in SBA-backed financing.
3. Preparing financials – Businesses must provide at least 12 months of operational history, along with financial statements and accounts receivable/inventory reports.

For manufacturing companies, the WCP is a game-changer. Whether you’re managing a government contract, ramping up exports, or simply trying to keep cash flow steady, this new program offers a level of flexibility and affordability that’s been sorely missing in SBA-backed lending.

Want to learn more? Contact an SBA Export Finance Manager or visit the SBA’s training resources for lenders here.