WASHINGTON – Small businesses suffering financial hardship as a result of the slow economy may be eligible to receive temporary relief to keep their doors open and get their cash flow back on track through to a new loan program, reported the Small Business Administration in a statement yesterday.
Beginning on June 15, SBA will start guaranteeing America’s Recovery Capital (ARC) loans, it reported. ARC loans are deferred-payment loans of up to $35,000 available to established, viable, for-profit small businesses that need short-term help to make their principal and interest payments on existing qualifying debt, according to SBA. ARC loans are interest-free to the borrower, 100 percent guaranteed by the SBA, and have no SBA fees associated with them.
“These ARC loans can provide the critical capital and support many small businesses need to make it through these tough economic times,” said SBA Administrator Karen G. Mills. “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.”
Marine Retailers Association of America President Phil Keeter said in a statement sent to members today that the new loan program “will possibly help many of you.”
As part of the Recovery Act, the ARC program was created as a no-interest, deferred payment loan to help small businesses that have a history of good performance, but as a result of the tough economy, are struggling to make debt payments, SBA stated.
ARC loans, which will be made by commercial lenders, will be disbursed within a period of up to six months and will provide funds to be used for payments of principal and interest for existing, qualifying small business debt including mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payable to vendors, suppliers and utilities, SBA reported. Repayment will not begin until 12 months after the final disbursement. Borrowers don’t have to pay interest on ARC loans. After the 12-month deferral period, borrowers will pay back the loan principal over a period of five years, according to SBA.
For more information on ARC loans, visit www.sba.gov.
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