The approval letter said $500,000. Then Dani (a made-up founder) sent the first monthly Borrowing Base Certificate for Brindlecove Hot Sauce Co. (a made-up wholesaler) and asked to draw $400,000 for a holiday inventory buy. The bank wired back a different number: $324,800 available. Not a decline. Just math nobody ran.
This is general information, not legal or financial advice. Confirm every rule with your lender and the current SOP before you apply.
The one tip
A Working Capital CAPLine is SBA's 7(a) line of credit for businesses with receivables or inventory. Under SBA SOP 50 10 8.1 (effective October 1, 2026), most of these lines are run off a Borrowing Base Certificate, and on lines of $2,000,000 or more that's mandatory. The line amount on your note is a ceiling. What you can actually draw is the lesser of the note or your borrowing base, minus what you already owe.
So the real tip: build your own borrowing base from your aging report before you sign, and clean up whatever SBA says doesn't count.
Here's what the SOP says gets knocked out or haircut:
- Any invoice more than 90 days past due is ineligible.
- If one customer is delinquent on more than 50% of its open invoices, ALL of that customer's invoices are out until the delinquent ones are paid in full.
- Invoices owed by an affiliate (a company you also own or control) don't count.
- If a customer is also someone you owe money to (a contra account), eligible receivables are reduced by the entire amount you owe them.
- Demo inventory, consigned goods, damaged or obsolete stock, and inventory at an address you never disclosed to the lender in writing are all out.
- Eligible domestic receivables advance at up to 80%. Eligible inventory advances at up to 50%.
Any exceptions beyond that need SBA's prior written concurrence. Lenders can also be stricter than SBA. Those are lender overlays, the bank's own rules, so ask for them.
Worked example
Brindlecove has a $500,000 Working Capital CAPLine with a $0 balance. On the month-end aging, receivables total $410,000.
Knock out the ineligibles:
- Invoices more than 90 days past due from three small shops: $38,000.
- A regional grocery account owes $60,000, and more than half of its invoices are late, so the whole $60,000 is out.
- Dani's other company, a food truck, owes $22,000 for product. Affiliate, so it's out.
- A pepper farm buys bottled sauce from Brindlecove, and Brindlecove owes the farm $9,000 for peppers. Subtract the full $9,000.
Eligible receivables: $410,000 minus $129,000 equals $281,000. At 80%, that's $224,800 of availability.
Now inventory. The listing shows $260,000. Remove $40,000 of trade-show demo stock and $20,000 sitting at a co-packer's warehouse that never made it into a written disclosure to the bank. Eligible inventory is $200,000. At 50%, that's $100,000.
Total borrowing base: $224,800 plus $100,000 equals $324,800. That's lower than the $500,000 note, so $324,800 is the cap. Dani's $400,000 holiday order is short by $75,200.
What one month of cleanup does:
- The grocery account pays $35,000 of late invoices. Its remaining $25,000 becomes eligible again, adding $20,000 of availability at 80%.
- Dani sends the bank the co-packer's address in writing, and that $20,000 of inventory adds $10,000 at 50%.
New borrowing base: $354,800, plus $35,000 of cash in the account. The gap to $400,000 nearly closes without a new loan.
Do this week
- Pull your accounts receivable aging and inventory listing as of last month-end.
- Strike every invoice over 90 days past due, every affiliate invoice, and every customer with more than half its invoices late.
- Net out anyone who is both a customer and a vendor.
- Send your lender, in writing, every address where your inventory sits.
- Multiply eligible receivables by 80% and eligible inventory by 50%, then add them. That's your real line before any lender overlays.
- Ask the lender when the BBC is due each month. The SOP says no later than 30 days after month-end, and advances on a monthly-reporting line must stop if it's 60 days late.
Your line is only as big as the invoices that pass the test.
Sources
- SBA SOP 50 10 8.1, Section B, Ch. 4 (7(a) CAPLines: eligibility, maximum loan amount, Borrowing Base Certificate formula, ineligible receivables and inventory, advance rates, and BBC reporting), Appendix 17 (CAPLines maturities), and Appendix 19 (CAPLines collateral): SBA's SOP 50 10 page
- SBA 7(a) loan types overview: SBA's 7(a) loans page
- More in the series: SBA 7(a) Playbook
Verified against SOP 50 10 8.1 text: October 25, 2026.
