Promotional products companies and other small businesses in need of working capital could soon have a new option through the U.S. Small Business Administration (SBA).

The SBA said Tuesday, June 4, that in the coming months it intends to launch a pilot program that will provide government-backed credit lines of up to $5 million for American small businesses.

SBA Administrator Isabel Casillas Guzman told CNBC that the solution offering is meant to be an improved option compared to the agency’s current products, thereby hopefully proving more attractive to borrowers – and the lenders who would extend the credit lines.

“This product is our aim to increase access to a simpler working capital line,” Guzman told CNBC. “It basically takes the best of our various options to create a pilot program to see if we can get more borrowers an affordable working capital line, versus just a pure reliance on credit cards.”

As envisioned, the forthcoming program’s capital lines will come with an annual fee and interest rates based on the prime rate – as well as 3% to 6.5%. The SBA said that, currently, that would translate to 12% to 15%. Business owners will be able to borrow against assets or use the credit to pay for particular projects.

To reduce risk for lenders, the SBA intends to guaranty 75% of the total of each loan above $150,000. The agency will guaranty 85% of the amount of each loan below the $150K threshold.

The SBA’s main 7(a) loan program backed 57,000 loans worth $27.5 billion last year. That was up 7% from 2022. The majority of the loans were for less than $350,000.