On June 15, 2009, the American Recovery Act made funds available to small businesses though the American Recovery Capital Loan or ARC program. The program is scheduled to expire on September 30th or when funds are exhausted, whichever comes first. According to the SBA’s North Florida office, funds are still available. Interested companies should begin the application process now.
The goal of the program, which program set aside $255 million to assist small businesses, is to provide temporary relief so businesses can keep their doors open and get cash flow back on track. It is not designed for companies on the verge of bankruptcy.
The ARC loans are designed to help businesses experiencing immediate financial hardship for reasons such as:
- Loss or reduction of customer base
- Increase cost of doing business
- Loss or reduction of working capital and/or loss or reduction of short term credit facilities
- Inability to restructure debt due to credit restrictions
- Loss or reduction of employees (intellectual capital)
- Loss or reduction of major suppliers (major suppliers out of business)
ARC loans can be used to make interest and principal payments, in part or full, for up to six (6) months on existing debt. Qualifying businesses will not be issued a check. The program takes over the payment of the principal and interest on qualified existing debt for a specified period of time. Included in the type of debt to which the loans can be applied are:
- Secured and unsecured conventional loans (mortgages term, and revolving lines of credit
- Credit Card obligations
- Capital Leases
- Notes Payable to Vendors/Suppliers/Utilities
- Development Loan Company Loan Program (504)
To qualify for the loan your business must:
- Have been in business at least two years
- Have shown a profit in one of the two past years
- Have Financial Statements – Balance Sheet, Income Statement, Cash Flow Statement – demonstrating the business had positive cash flow in one of the past two years
- Have cash flow projections for the next two years indicating sufficient cash flow to meet your current and future loan payments
ARC loans are interest free to the borrower, carry 100% guaranty from the SBA ti the lender and require no fees be paid to the SBA. Loan proceeds of up to $35,000 are provided over a six month period and repayment of the loan principal is deferred for 12 months after the final disbursement. Repayment of the loan can be extended up to five years.
All SBA approved lenders are not participating in the program. Companies interested in applying for program should contact their local SBA office for a list of participating lenders and for guidance through the application process.