On ARC loans can be used to pay principal and interest on qualifying ARC loans are designed to help small businesses experiencing
June 15, the Small Business Administration (SBA) will begin offering
interest-free loans of up to $35,000 to help small businesses keep
their doors open through the recession.
The America's Recovery Capital (ARC) loans are designed to help small businesses make payments on existing debt.
loans, which may include credit card obligations, notes payable to
suppliers, small business loans and others. The loans are
interest-free, collateral-free, 100 percent backed by the SBA and
require no fees paid to the SBA.
“These loans allow borrowers to redirect cash flow from making loan
payments to investing in their businesses, to help sustain the business
and retain jobs,” according to the SBA. For example, making loan
payments on existing loans with proceeds from an ARC loan can allow a
business to focus more funds on buying inventory, making payroll or
other core operations.
immediate financial hardship, such as declining sales and revenues,
difficulty making loan payments on existing debt, difficulty paying
employees, difficulty purchasing supplies or inventory and difficulty
paying rent or other operating expenses.
The loan amounts 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. Each small
business can have just one ARC loan.
ARC loans will be offered by commercial lenders that are SBA
participants, for as long as funding is available or until Sept. 30,
2010. The SBA describes the best candidates
for loans as small businesses that “were profitable but are currently
struggling, yet have been making loan payments or are just beginning to
miss loan payments due to financial hardship… Borrowers whose loans are
already severely delinquent or whose past performance or future cash
flow indicates that the business is not viable are not good candidates
for an ARC loan.”
For more information about how to qualify for an ARC loan, visit the SBA’s Web site.