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The SBA CAPLines Program and the Working Capital Gap  


Author:  Daniel C. Godfrey.


Source: Volume 24, Number 05, May/June 2011 , pp.17-23(7)




Journal of Taxation and Regulation of Financial Institutions

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Abstract: 

Banks can take advantage of the Small Business Administration’s Standard Asset Based CAPLines program to assist small- and middle-market business customers to solve working capital issues. The program effectively mitigates the risk inherent to receivables and inventory financing and promotes sound banking practices related to capital and liquidity considerations. This article sets out the advantages of the program and explains what banks must do, under applicable law and regulatory guidelines, to qualify to use the program to help them diversify and, ultimately, increase their profitability.

Keywords: CAPLines, asset-based lending, risk-weighting, SBA, collateral

Affiliations:  1: Celtic Bank Corporation.

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