SBA rules · SOP 50 10 8.1
What is an SBA MARC loan for manufacturers?
The SBA 7(a) Manufacturers' Access to Revolving Credit (MARC) program provides revolving lines of credit of up to $5,000,000 specifically to support eligible manufacturing and supply chain businesses with working capital needs.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Facility size and structure: For manufacturers operating in NAICS sectors 31-33, the maximum loan amount is $5,000,000, structured as a revolving line of credit that cannot be sold on the secondary market and may revolve for up to 10 years with a maximum total maturity of 20 years.
- Guaranty and interest rates: The SBA guaranty is 75% for loans over $150,000 (capped at $3,750,000) and 85% for loans of $150,000 or less, with variable interest rates governed by Standard 7(a) maximum rate caps.
- Eligible uses and equity: Proceeds may only fund the business's working capital needs or refinance debt originally incurred for working capital, and unlike Standard 7(a) or 7(a) Small loans, MARC loans have no minimum required equity injection based on use of proceeds.
- Underwriting and collateral: Lenders must place a UCC-1 lien on all business assets and obtain a first lien on trading assets (accounts receivable and inventory), while underwriting requires a minimum historical or 2-year projected debt service coverage ratio of 1.15:1 and global DSC of at least 1.0:1.
- Annual reviews and servicing fees: Starting no later than 24 months after approval, lenders must conduct annual reviews requiring a fully amortizing DSC ratio of at least 1.10:1 to maintain revolving status, and lenders may assess an annual extraordinary servicing fee of up to 0.50% of the maximum loan amount, or up to 2.0% of the outstanding balance if administered as an asset-based line.
The source
What the SOP says
“Manufacturing: NAICS sectors 31-33, where 31, 32, or 33 are the first 2 digits of the business’ primary 6-digit NAICS code.
“Manufacturers (NAICS 31-33): $5,000,000.
“The loan must be a revolving loan.
“Revolving loans: May not be sold on the secondary market.
“To support the working capital needs of the Applicant business; or
“Refinancing debt in which the original purpose of the debt to be refinanced was for working capital purposes.
“Unlike Standard 7(a) and 7(a) Small loans, 7(a) MARC loans do not have a minimum required equity injection based on use of proceeds.
“Manufacturers (NAICS 31-33): loans less than or equal to $5,000,000, the maximum guaranty amount is $3,750,000.
“75% for loans over $150,000.
“Revolving loans have a maximum maturity of 20 years.
“Revolving loans may not revolve for more than 10 years. At the end of the revolving period, the loan must be converted to a fully amortizing loan with a maximum additional repayment term of up to 10 years.
“The Lender must place a lien on all assets of the business through a UCC-1 filing.
“The Lender must obtain a first lien on the trading assets of the business, including accounts receivable and inventory.
“at the time of the annual review, the Lender may charge an extraordinary servicing fee of up to 50 basis points (0.50%) based on the maximum loan amount.
“Can support a debt service coverage ratio of at least 1.10:1. Debt service coverage calculation must be based on the full debt service of the business, including the debt service for the 7(a) MARC loan, on a fully amortizing basis using the maximum loan amount and maturity approved;
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.