Lenders
play a critical role in the health of the American economy, and are
especially vital to small businesses. The U.S. Small Business
Administration is implementing a special, temporary loan program you
can use to help struggling American small businesses while reducing
your risk during these tough economic conditions.
Under authority
provided in the American Recovery and Reinvestment Act (signed Feb. 17,
2009), SBA has designed a deferred-payment loan program to help small
businesses make payments on existing debt.
Section 506 of the
Recovery Act authorized SBA to help viable small businesses make
payments on existing small business debt. The America’s Recovery
Capital, or ARC Loan Program, is designed to give viable small
businesses facing immediate financial hardship some temporary financial
relief so they can keep their doors open, refocus and get their cash
flow back on track. ARC loans are available through SBA-approved small
business lenders and have been authorized through Sept. 30, 2010, or
until the appropriated funds run out, whichever comes first.
Non-SBA
lenders can become ARC lenders. Contact your local SBA district office
for information and training. You can find the nearest SBA district
office at www.sba.gov/localresources/index.html.
Loan structure
- An ARC loan is a deferred-payment loan of up to $35,000.
- ARC
loans will be used to make up to six months of principal and interest
payments on qualifying loans for existing viable for-profit small
businesses in the United States.
- Disbursement period (up to six
months) is followed by 12 months with no repayment of the ARC loan
principal, followed by a repayment period of five years. SBA pays
monthly interest to the bank.
How lenders benefit
- Reduced Risk: 100 percent guaranty provides greater security and confidence to lend.
- Guaranteed Interest: SBA will pay monthly interest to the lender at reasonable rates throughout the term of the loan.
- Conventional,
commercial business loans (and SBA-guaranteed loans made on or after
Feb. 17, 2009) are an eligible use for ARC loan proceeds.
- Proceeds
may be used to pay on mortgages, secured and unsecured loans, lines of
credit and credit cards if the debt was used for eligible business
purposes under the program.
- SBA turnaround on non-delegated loan applications – expected within five to ten business days.
- Access to E-Tran, SBA’s electronic application process available to SBA delegated lenders.
- Existing SBA lenders are eligible to make ARC loans and delegated lenders may make ARC loans on a delegated basis.
How the community benefits
- SBA loans help build and retain community businesses, create jobs and stimulate economic activity.
How small business owners benefit
- ARC loans are interest-free to the borrower, have deferred payments for 12 months, and have no SBA fees associated with them.
- ARC loans will allow borrowers to redirect cash flow from making loan payments to investing in their businesses.
- Banks will begin investing in small businesses again, making credit more readily available for those businesses that need it.
- Streamlined applications by SBA.
SBA
loan programs now provide greater incentives to you the lender, are
more affordable for small business owners, and help to drive economic
recovery in your community.
For more information, click on www.sba.gov/recovery.
All SBA programs and services are provided on a nondiscriminatory basis.
U.S. Small Business Administration • Recovery Act: Lenders Can Help Small Business with ARC Loans • 2
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