Retailers and other small businesses experiencing financial troubles due to 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.
On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (Recovery Act). Beginning June 15, the Small Business Administration (SBA) will guarantee America's Recovery Capital (ARC) loans as part of that plan.
What is the ARC Loan Program?
ARC loans are interest-free, deferred-payment loans of up to $35,000 and are available to established, for-profit small businesses that need short-term help. ARC loans are 100 percent guaranteed by the SBA and have no SBA fees associated with them.
ARC loans are designed to help businesses experiencing immediate financial hardship for reasons such as a loss or reduction of customers, working capital, employees or major suppliers.
ARC loans will be used to make up to six months of payments on qualifying small business debt including mortgages, lines of credit, capital leases, credit cards and notes payable to vendors, suppliers and utilities.
The 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.
Does my business qualify for an ARC Loan?
ARC loans are only available to established small businesses with financial statements showing it was profitable in at least one of the past three years. The small business must also be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval.
If your business is already delinquent in paying its bills or if it has a history of operating with a negative cash flow, it may not be eligible.
How can I apply for an ARC Loan?
ARC Loans are provided by commercial lenders, guaranteed by the SBA and limited to one per business.
If you would like to apply for an ARC loan, contact your local lender who will help you determine if you are a good candidate.
