SBA SOP 50 10 8, B.Ch3.A.4 — Builders CAPLines
Verbatim text of SBA SOP 50 10 8 section B.Ch3.A.4 (Builders CAPLines), effective 2025-06-01. 5 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, B.Ch3.A.4 — Builders CAPLines — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8 B.Ch3.A.4
4. Builders CAPLines 13 CFR §§ 120.391 – 120.397 Builders CAPLines provide financing to small general contractors to construct or rehabilitate residential or commercial property for resale. This program provides an exception under specified conditions to the general rule against financing investment property. “Construct” and “rehabilitate” mean only work done on-site to the structure, utility connections, and landscaping. Eligibility To be eligible for a Builders CAPLine, the Applicant must: i. Be a construction contractor or homebuilder with demonstrated managerial and technical ability in profitable construction or renovation; ii. Must either perform the construction/renovation work or manage the job with at least one supervisory employee on the job site during the entire construction phase;
SOP 50 10 8 B.Ch3.A.4.i.iii
iii. Renovations must be “prompt and significant.” Construction must begin within a reasonable time after loan approval and the cost of renovation must equal or exceed one-third (1/3) of the purchase price of the property. The cost of renovation of buildings already owned by the Applicant must equal or exceed one-third (1/3) of the fair market value at the time of loan application;
SOP 50 10 8 B.Ch3.A.4.i.iv
iv. Demonstrate a successful performance record in bidding and completing construction/renovation at a profit within the estimated construction period, and the prior successful performance must have been of comparable type and size to the proposed project (prior experience in single family construction is not comparable to high-rise apartment construction); and
SOP 50 10 8 B.Ch3.A.4.v
v. Be able to demonstrate prior prompt payments to suppliers and subcontractors. Eligible Uses of Proceeds 13 CFR §§ 120.394 and 120.397 i. Borrowers must use the loan proceeds solely for direct expenses related to the construction and/or “substantial” renovation costs of a specific eligible project (residential or commercial buildings for resale), including labor, supplies, materials, equipment rental, direct fees (building permits, interim disbursement inspection fees, etc.), utility connections (above or below ground), construction of septic tanks, and landscaping. (“Substantial” means rehabilitation expenses of more than one-third of the purchase price or fair market value at the time of application.)
SOP 50 10 8 B.Ch3.A.4.v.ii
ii. Proceeds paid to a subcontractor can include the subcontractor’s profit. The cost of land is eligible if the land cost does not exceed 33 percent of the project cost. Up to 5% of the project cost can be allocated for improvements that benefit all properties in a subdivision, such as streets, curbs, sidewalks, or open spaces. iii. Proceeds must not be used to: a) Purchase vacant land for possible future construction; b) Operate or hold rental property for future rehabilitation; or c) Refinance existing debt. A single line may be used to fund multiple projects. Once the overall line amount has been approved by SBA, the Lender may advance against additional projects without SBA approval, providing the Borrower and Lender are in compliance with all terms. SBA may allow the finished property to be rented pending sale only in cases where the rental will enhance the ability to sell the property. The final sale of the property must be an arm’s length transaction with legal transfer to an unaffiliated third party. B. LOAN TERMS AND CONDITIONS FOR ALL CAPLINES
Operationalizing SBA SOP 50 10 8, B.Ch3.A.4 — Builders CAPLines
This is verbatim, source-snapshotted regulator text from the Claude for Compliance open corpus. To turn a rule like this into compliance work product: gap-analyze your policies and procedures (P&Ps) against these requirements to surface stale, conflicting, or missing provisions; operationalize any change with a ready-to-run update kit; and produce audit-ready evidence — every step grounded only in the regulator’s own words, never invented.
To work from the whole rulebook rather than this one page: download the corpus — every register on this site, verbatim, each with its source snapshot and effective date — then follow the methodology. It asks your assistant to answer only from the downloaded text, cite the register id and effective date it used, and tell you when the corpus does not cover something instead of filling the gap from memory. Running it locally also means no one sees which regulations you are looking at.
Source of record: https://claudeforcompliance.com/regs/sba-sop-b-ch3-a-4/
· register sba-sop-b-ch3-a-4 · Claude for Compliance. Free to read and download;
see regulatory updates and methodology.