The US Small Business Administration (SBA) has announced the details on a new loan program that could offer great help to many businesses that have been adversely affected by the 2008-2009 economic recession. The program, called "America’s Recovery Capital" (ARC), offers business owners interest-free, deferred-payment emergency loans for up to $35,000. The loans must be used to repay existing debt service from non-federal institutions and do not have to be repaid until 12 months after funds are dispersed.
This funding tool is unique and unprecedented in the history of the SBA. The ARC program will put cash immediately in the hands of needy businesses and temporarily lighten their debt load until the economy recovers. Unfortunately, funding for this program is limited to $255 million and it is expected that this capitalization will quickly be used up. If a business wants to have a chance at receiving ARC funds, they must apply for the loan as soon as possible. The SBA began accepting applications on June 15th. The basic criteria for ARC applicants is listed below.
Eligible borrowers are:
•Existing for-profit small businesses in operation for at least two years
•Viable, going concerns
•Do not derive income from gambling, speculation, religion, or prurient products or activities
•Not currently pending bankruptcy
•Not more than 60 days delinquent on their loan(s) ARC funds can be used to repay debt service related to a number of business expenses.
The types of debt that can be repaid with ARC funds include:
•Secured and unsecured bank loans
•Credit cards (business expenses only)
•Notes payable to vendors/suppliers/utilities
•Home Equity Lines of Credit (used for business purposes)
To apply for an ARC loan, you will need to prepare the following:
•A completed ARC application. The application can be downloaded from the SBA website by following this link.
•Borrowers will need to provide lenders with a full set of financial statements including three years of balance sheets, profit and loss statements, quarterly cash flow projections and income tax returns.
•Borrowers should have documentation for all business debts ready to show the lender in order to understand the complete financial position of the borrower’s business.
•Borrowers must be prepared to offer collateral against the ARC loan. While ARC loans are interest-free to the borrower, they are still secured by collateral.
ARC funds can be obtained through existing SBA lenders. Most banks that have commercial lending divisions also participate in SBA lending. Contact your preferred lending institution and ask if they plan on participating in the ARC program. If you have further questions, please contact Lake County Partners at (847) 247-0137, one of several local agencies that can assist you.