WASHINGTON, D.C. – Karen G. Mills, administrator of the U.S. Small Business Administration (SBA), has announced a new loan program designed to provide small businesses suffering financial hardship as a result of the slow economy with temporary relief to keep their doors open and get cash flow back on track.
Beginning June 15, the SBA will guarantee America’s Recovery Capital (ARC) loans, Mills said in a news release issued today. The ARC loans are deferred-payment loans of up to $35,000 available to “established, viable, for-profit small businesses,” the SBA said, that need short-term assistance to make principal and interest payments on existing qualifying debt.
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The loans are interest-free to the borrower, 100 percent guaranteed by the SBA and have no SBA fees associated with them, Mills said.
“These ARC loans can provide the critical capital and support many small businesses need to make it through these tough economic times,” Mills said. “Together with other provisions of the [federal] 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.”
As part of the American Recovery and Reinvestment Act of 2009, enacted by Congress in February at the urging of President Barack Obama, the ARC program was created to provide no-interest, deferred-payment loans to small businesses with a history of good performance, the SBA said. Qualifying small businesses can use the funds to make principal and interest payments on mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payable to vendors, suppliers and utilities.
The loans will be disbursed within a period of six months. Repayment will not begin until 12 months after the final disbursement, the SBA said, and borrowers do not have to pay interest. After the 12-month deferral period, borrowers will pay back the principal over a period of five years. The loans will be made by commercial lenders, not SBA directly. More information is available on the SBA Web site, www.sba.gov.
