Small businesses suffering financial hardship as a result of the slow economy may be eligible to receive temporary relief to keep their doors open and get their cash flow back on track through a new loan program announced by Small Business Administration (SBA) Administrator Karen Mills. Beginning on June 15, the SBA will start guaranteeing America’s Recovery Capital (ARC) loans. ARC loans are deferred-payment loans as highlighted below.
- These short-term loans of up to $35,000 can be used to make up to six months of Principal and interest payments on qualifying loans for existing “viable” for-profit small businesses in the United States.
- Debt may include secured and unsecured conventional loans (mortgages, term and revolving lines of credit); capital leases; notes payable to vendors/suppliers/utilities; Development Company Loan Program (55504); first mortgage loans; credit card obligations; and loans made with an SBA guarantee after February 17, 2009.
- Loans have no SBA fees or interest costs for the borrower and are 100% guaranteed by the SBA.
- Loans will be disbursed within a period of six months, followed by 12 months of no repayment, and then five years to pay it back.
- ARC loans are for viable businesses, meaning that the business must have an established history of good performance, but are in a situation where they need extra help to bridge the “troubled waters”.
- Guaranteed Interest: SBA will pay monthly interest to lenders at “reasonable” rates throughout the term of the loan.
- The SBA expects to release detailed guidance for lender training by June 8.
- The SBA does not expect to be in a position to accept loan packages from lenders until June 15.
ARC loans will be made by commercial lenders, not SBA directly. For answers to your questions and/or more information on ARC loans, visit the SBA website or your local SBA office.
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Posted by: Mike Clough
