The Small Business Administration (SBA) June 8 issued guidelines on “America’s Recovery Capital” (ARC) loans that were authorized in February as part of the American Recovery and Reinvestment Act of 2009 (H.R. 1) to provide up to $35,000 in short-term relief for small businesses facing immediate financial hardship.
ARC loans are interest-free to the borrower, carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to SBA. Loans are disbursed over a six-month period and repayment of the principal is deferred for 12 months after the last disbursement. Repayment can extend up to five years.
The best candidates for ARC loans are small businesses that were once profitable but are currently struggling to make loan payments, or are just beginning to miss loan payments due to financial hardship. ARC loans can be used to make payments on one or more existing, qualifying small business loans for up to six months. Examples of qualifying loans may include credit card debt, capital leases, payments to suppliers, loans to small businesses made without an SBA guaranty, and loans made by or with an SBA guaranty on or after Feb. 17, 2009.
ARC loans are made by commercial lenders who are SBA participants and will be offered by some SBA lenders until September 30, 2010, or for as long as funding is available. Each business is limited to one ARC loan, but that loan can be used to make payments on multiple debts. The SBA will begin processing applications June 15, but individual banks may take longer to draft their own application procedures.
To view a list of lenders, click
here.
To learn more about the ARC loan program, click
here, or call the SBA’s toll free number, 866-947-8081, Mon. – Fri., between 8 a.m. and 9 p.m. (EDT).