America’s Recovery Capital (“ARC”) Loan Program
Beginning June 15, 2009 SBA will accept applications under a new temporary loan program authorized under the American Recovery and Reinvestment Act to give viable small businesses short-term financial relief so they can continue operations. A “viable business” is one that has operated profitably in the past but is beginning to struggle to make loan payments due to general economic conditions as evidenced by an increased cost of doing business, inability to restructure debt due to credit restrictions, or the reduction or loss of any of the following: customer base, working capital or short-term loans, employees, or suppliers. Following are some highlights of the program:
- $35,000 maximum loan amount
- No interest (as to borrower)
- No fees
- 100% SBA guaranty
- 6 month maximum disbursement period
- No payments for 1 year after loan is fully disbursed
- Maximum maturity of 6 years after final disbursement
- Generally, loan proceeds must be used to make payments on existing non-SBA loans, leases, notes payable to vendors or utilities.
- The business must have operated over the past 2 years.
- The business must have been profitable at least 1 of the last 3 years.
- Existing debt must not be more than 60 days past due.
- A reasonable 2 year cash flow projection must show capacity to repay the loan.
SBA has also temporarily waived fees, and increased its guaranty to 90%, on its other loan programs. All of this means that now is a great time to get an SBA loan.