SBA Montana District Office Newsletter - Feb. 2020

Having trouble viewing this email? View it as a Web page.

Montana District Office  - Feb. 2020

u s small business administration

How an SBA Contract CAPLine Can Help You Build

Start or expand your business with SBA-guaranteed loans.

By: Jordan Belser, SBA

If you’re a contractor, there’s a good chance you’ve heard of the U.S. Small Business Administration’s CAPLine program. Today, there are four programs underneath the program’s umbrella: Seasonal, Contract, Builder’s and Working Capital.

So, what exactly is the CAPLine program? The SBA defines the program as “loans up to $5 million that are designed to help small businesses meet their short-term and cyclical working capital needs.” Essentially, the SBA recognized the unique challenges small businesses face (especially those in the construction industry) and created a series of programs that make these challenges a little easier to tackle.

We’re going to talk about Contract CAPLines here, but if you’d like more information about the other programs please reach out to your nearest SBA office. These programs can help with inventory management, funding seasonal activities and more.

Contract CAPLine loans, as the name suggests, are used to finance the costs of one or more specific contracts, sub-contracts or purchase orders – including overhead or administrative expenses – allocable to the specific contract(s). These loans can be for amounts up to $5 million, are typically short-term and can be structured so that repayment begins only when payment for the activity has been made to the business. In other words, you often wouldn’t have to make a loan payment until you’ve been paid for your work.

“The key detail when it comes to Contract CAPLines is that a bank will require an assignment of contract proceeds as collateral,” explained Tom White, a CAPLine expert and Lender Relations Specialist with the SBA Montana District Office. “Basically, the proceeds from the contract will pass through the lender before they get to the business owner. This ensures the lender gets their repayment, and it often takes the burden of collateral off of the business.”

In order to be eligible for a Contract CAPLine loan, a business most possess the ability to bid, accurately project costs and demonstrate the technical experience to perform the specific work. For these reasons, a Contract CAPLine is generally not suitable for start-up businesses.

“There are always exceptions,” White added. “A business owner might be new to entrepreneurship, but that individual may have 20 years of experience as a foreman for a larger firm. The lender will look at all of these factors before making a decision.”

The business must also meet general SBA 7(a) loan eligibility requirements, be in good character, meet minimum credit worthiness criteria and have a contract “in hand” to begin the process. More information about 7(a) eligibility can be found here:
An example of a situation where a Contract CAPLine might make sense would be a small road paving firm with 10 employees that is awarded a $5 million road construction project. This hypothetical business may not have sufficient capital to hire a new labor force and pre-pay for materials. With a contract award and suitable experience paving roads, this company might look towards the CAPLine program and a quality lender to help them ramp up labor and take advantage of bulk material discounts.

“It’s important to choose wisely when you set out to find a lender,” White said. “Work with a lender that understands your business – they’re going to be very involved in the process and you’ll want to make sure they’ll be there for you if you need them.”

If you’d like more information about Contract CAPLines or other SBA products and services, please contact your nearest SBA district office. A list of district office locations can be found at For Montana, we can be reached at (406) 441-1081.

Learn More

Additional Headlines

am i

Biz Tip: Am I Doing Social Media Right? (Courtesy of the Wyoming SBDC Network)

When you are running a business, it is incredibly hard to find the time for social media. The phone is constantly ringing (and frustratingly, it’s more likely to be a spam call than an actual customer) and your email inbox is rarely, if ever, at zero. On top of that, determining the return on investment for your social media efforts can be challenging.

Here’s the thing though — your social media content matters because your feed is often the first interaction a potential customer will have with your brand. It’s also one of the primary ways that you maintain a relationship with current customers (in addition to email marketing, events, etc.). So, let’s walk through some important questions you need to ask about your social media accounts in order to determine if you are doing it right...


Upcoming Events

Feb. 11: A Digital Marketing Strategies Workshop (Ennis) presented by the Montana SBDC

Social Media Training will be held in the Conference Room at Madison Valley Bank in Ennis. The class will be from 9-3PM. The cost to attend is $25.00 per person. Advanced registration is required. 

Point of Contact: Julie Jaksha (406) 533-6781
Location: 213 Main Street Madison Valley Bank Conference Room Ennis, MT 59729 , Ennis MT 59729-9051

Feb. 13: Pre-Business Workshop (Billings) presented by the Montana SBDC

Learn the basic steps to start your own business, including business plans, funding options and more. 

Kayla Vokral (406) 254-6014
222 N. 32nd St. First Floor Yellowstone Conference Room, Billings MT 59101

Feb. 26: Introduction to Government Contracting (Great Falls) presented by the Montana PTAC

Did you know that over $9.2 billion in government contracts were awarded in Montana over the last 12 months (80,775 prime awards)? That doesn't include State and Local contracts. Governmental agencies buy everything from nuts (the nutritional kind) to bolts and any type of service you can name.

If you want to check into how your business can get a "piece of the pie," join Lillian Sunwall, Vice President, Business Strategist and Certified Procurement Professional at Great Falls Development Authority (GFDA) and the Great Falls area Procurement Technical Assistance Center (PTAC) for this introduction to selling your products and services to the government.

Point of Contact: Jason Nitschke (406) 750-0314
Location: 405 3rd Street NW, Suite 203 Great Falls Development Authority, Great Falls MT 59404-4115