As part of President Obama’s efforts to help us recover from the economic disaster of the past few years, from June 15, 2009 to September 30, 2010, the Small Business Administration is offering a guaranteed loan program for small businesses. This program, called the ARC loan program (Americans’ Recovery Capital), is designed to provide short-term financial relief to struggling but promising small business throughout the United States.
ARC loans are capped at $35,000 and are intended to be used to make payments on interest and principal of existing loans and other debts (including suppliers, credit card companies, and other major expenses), thereby allowing small businesses to defer their income directly to operating expenses such as payroll, utilities, and necessary supplies.
These loans are not granted by the SBA directly, but by other lenders. The loan funds can be drawn down over a 6-month period. The loans are interest free and the borrower is not required to begin making payments on the ARC loan for 12 months after the final disbursement. Repayment may be extended over a period of up to 5 years.
Although the SBA guarantees repayment of the loan to your lender, the SBA does not charge a fee for its involvement in this program. The entire goal of the program is to help small businesses to stay in business while the economy is struggling. The SBA has taken the position that by decreasing the risk to lenders, they will be increasing our access to much-needed funds. It’s a win-win situation.
To be eligible for an ARC loan, a small business must demonstrate its viability or past success. The loan funds can only be used for approved debt, and you may be required to provide various documentation to your lending institution. In some cases, your regular bank may be able to offer you access to this program.
On behalf of small business owners, I think it is admirable that our president has taken measures to help small businesses, which generate billions in revenue in the U.S. every year.
Call your bank or visit the SBA website and learn more about how to apply for an ARC loan.