The Small Business Administration, or SBA, has just started offering ARC Loans, which was part of the $ 787 Million package the Obama administration put forward in January. ARC, which is an abbreviation of America's Recovery Capital, is a loan program that will provide short term loans of up to $ 35,000 to small businesses that are facing immediate financial hardship.
These loans will be interest free and fee free, although the banks that are doing the lending for the SBA may have some fees of their own. Each small business will be entitles to one loan from the ARC pool.
These special loans from the Small Business Administration will have a twelve month grace period before repayment begins. Borrowers have a five year time line to repay the loans they receive.
Beginning on June 15th, the SBA will guarantee the bridge loans for 100% of the loan amount "to established, viable, for-profit small businesses." This is an increase of the usual 90% limit of SBA loan guarantees.
The total amount of funds available for this program totals $ 255 million for this loan program. Once all the funds are depleted, the loans will no longer be granted, even if the programs deadline has not yet been reached.
These ARC loans can provide the critical capital and support many small businesses need to make through these tough economic times, "Karen Mills, The SBA Administrator, said." Together with other provisions of the Recovery Act, ARC loans will free up capital and put more money in the hands of small business owners when they need it the most. This will help viable small businesses continue to grow and thrive and create new jobs in communities across the country. "
ARC loans funds can be used for payments of principal and interest for existing, qualifying small business debt. This includes paying down mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payable to vendors, suppliers and utilities. it can not be used, however, to pay off existing small business administration loans.