New SBA Program Starts Today
Small businesses needing assistance with making payments on existing debts have a new option starting today -- the American Recovery Capital (ARC) program from the Small Business Administration (SBA). This new emergency lending program aims to help businesses that have not missed a payment yet or are just beginning to miss loan payments, but face a drop in their sales and in their credit lines. These loans will allow borrowers to regain some liquidity and redirect cash flow from making loan payments to investing in their businesses, in order to retain jobs and return to profitability.
The ARC program offers short-term, interest-free loans of up to $35,000. Borrowers have up to six years to repay it. ARC loans can be used to make payments of principal and interest, in full or in part, on one or more existing, qualifying small business loans for up to six months. About the only restriction is that the ARC loan cannot be used to pay any previous SBA-backed loan the business may have outstanding. ARC loans will be offered by SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first.
The ARC program is part of the larger economic recovery efforts legislated earlier this year. In April, the SBA dropped fees and broadened eligibility criteria for businesses applying for funding, opening the doors for an additional 70,000 companies to apply for its 7(a) and 504 lending programs. As a result of all these measures, about 10,000 new loans have been approved, causing a 25 percent boost in the SBA’s average weekly loan volumes.