SBA to open up new loans for small businesses

ARC loans help qualified small businesses struggling because of economy

May 20, 2009 — There's a new kind of loan available to small businesses starting next month.

The Small Business Administration is moving forward with "America's Recovery Capital" (ARC) loans -- no-interest, deferred-payment loans to help small businesses who are strong performers but who may be struggling with debt repayment because of the tough economy. The loans are available for up to $35,000 and can be used to pay non-SBA debt.

The ARC loans are part of the American Recovery and Reinvestment Act, the stimulus bill Congress passed and President Obama signed in February.

How ARC loans work:

Eligible small businesses can use the loan to pay principal/interest on existing, qualifying small-business debt, such as mortgages, term and revolving lines of credit, capital leases, credit card obligations, and notes to vendors, suppliers and utilities.

Loans carry no fees or interest rates for the borrower.

Loans are disbursed to the borrower over six months.

Loans are 100% guaranteed by the SBA.

Repayment of ARC loans begins 12 months after a loan is disbursed in full. The loan principal must be paid back within five years.

The SBA is working with lenders to provide guidance on ARC loans by June 8. The agency will begin accepting loan packages from lenders starting June 15. ARC loans will be available until Sept. 2010 or until the funding runs out, whichever comes first.

If you'd like to apply for an ARC loan, visit the SBA's Web site to find out who is eligible and how to apply. Or an SBA district office can point you to SBA resource partners in your area, including lenders.

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