"We can fund the boards. We can't fund April." That's what Theo (a made-up founder) heard about the $250,000 SBA Seasonal CAPLine he wanted for Ridgeline Board Shop (a made-up snowboard shop in Denver). The line came back at $180,000. His credit was fine. One line in his cash flow plan broke the rules.
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 Seasonal CAPLine pays for the build-up, not the hangover. Under SBA SOP 50 10 8.1 (effective October 1, 2026), Section B, Chapter 4, the money can only finance the seasonal jump in inventory and receivables, and in some cases the extra labor that comes with it. It can't be used to keep the lights on during your slow months, and it can't refinance debt.
You also need at least 12 calendar months in operation and a definite pattern of seasonal activity. Then the line has to act seasonal. Draws happen during the build-up. Principal gets paid as soon as the season's sales cash comes in, with interest monthly. The SOP says the last draw should leave time for the stock to turn back into cash and pay the balance off by the start of a 30-day clean-up period or maturity. Interest-only beyond the season isn't allowed.
Worked example
Theo's shop is 4 years old. Last winter, November through February brought in about 70% of his $1.1 million in sales. His $250,000 request:
- $150,000 For fall inventory: boards, bindings, outerwear.
- $30,000 For seasonal staff during the December rush.
- $70,000 To cover rent and payroll from April to June.
The first two are build-up costs. The third is slow-season survival, so it's out. The line drops to $180,000.
Now the part that saves him money. SBA guarantees up to 75% of a loan over $150,000, so $135,000. For loans approved October 1, 2026 through September 30, 2027, the SBA guaranty fee on a 12-month line is 0.25% of the guaranteed portion: $337.50. Give the same line a 24-month maturity and the fee is 3%: $4,050. Retail in a city doesn't get the fee waivers for manufacturers or rural businesses. Pick the short maturity and he keeps $3,712.50.
The cash flow, assuming 10.5% (an assumption, not a quote; SBA caps a line this size at Prime plus 6.0%):
- August to October: draws of $40,000, $60,000 and $50,000 for inventory.
- November: $30,000 for staff. He owes $180,000.
- December: holiday sales pay down $100,000.
- January: the last $80,000 is paid off.
Interest over the whole cycle is about $6,400. He's at zero well before the 30-day clean-up.
And April's rent? That comes out of the winter's profit, set aside in January. If Theo needs a cushion bigger than that, he asks about a separate term loan for working capital.
Fund the boards in October. Pay for April out of January.
Do this week
- Pull 24 to 36 months of monthly sales. Mark the peak and the dip.
- Build a month-by-month cash plan: when you buy stock, when you hire, when the cash lands.
- Cut any slow-month rent, payroll or debt payoff out of the request.
- Size the line to your biggest build-up gap, not your wish list.
- Ask whether the line can be 12 months or less, and what an extension would cost. Stretching a short-term loan past 12 months means an extra guaranty fee.
- Ask which rules are SBA's and which are the bank's own overlays.
The bigger CAPLine picture is in our post on the Working Capital CAPLine borrowing base.
MCAFax isn't affiliated with or endorsed by the SBA.
Sources
SBA SOP 50 10 8.1, Section B, Ch. 4, Para. A.3 (Seasonal CAPLines), Para. B (loan amounts and rate caps) and the CAPLines-specific loan closing and disbursement requirements (Seasonal disbursement and repayment); Section B, Ch. 6, Para. D (no interest-only beyond the seasonal cycle); Appendix 16 (guaranty percentages); Appendix 17 (CAPLine maturities and short-term extension fee), all on SBA's SOP 50 10 page; SBA Information Notice 5000-881797 on FY 2027 7(a) fees; 13 CFR 120.390 on eCFR; 13 CFR 120.220 on eCFR.
More in the series: SBA 7(a) Playbook
Verified against SOP 50 10 8.1 text: October 30, 2026.
