U.S. Small Business Administration has designed a new loan program for those small scale businesses that are stressed for meeting the expenses in these economic times. America’s Recovery Capital Loan Program from SBA can give the businesses a loan of up to thirty five thousand dollars for the viable small scale businesses as a short-tern relief. Each small scale business can get only one ARC loan. They have to use this loan for returning to profitability.Most of the SBA lenders who offer ARC loans will give repayment time till the 30th of September 2010.
These loans can be made use for paying the interest or principal of one or more existing business loans. ARC loans will provide the introduction of capital into the small scale businesses by assisting those in the payment of interest and principal of existing debt.
This will allow the borrowers in the redirection of cash flow which might have used in making loan payments to make investments in their businesses, retaining jobs and sustaining the business. Making the payments on existing loans will help the business to concentrate more on its core operations. The core operations include buying inventory, creating payroll etc.
ARC loans carry a cent percent guarantee from SBA, that they are interest free. And you don’t have to pay any fees to SBA. The loan proceedings will be distributed over a period of over six months and the payment of the loan principal will be deferred for twelve months after the last distribution of the proceeds. The repayment period can extend up to five years. The ARC loans can be easily availed by small businesses which were profitable in the past but are going through a rough patch now. The businesses that are still making loan payments or just started missing loan installments can also go for these loans. Only SBA participants who are commercial lenders can issue ARC loans. The SBA is paying a monthly interest for the loans till the end of the loan term. The non-SBA lenders can be SBA participants by contacting the SBA district office near them. You must visit a commercial lender first to get an ARC loan.
All the businesses that are facing financial problems because of problems like losing customer base increase in business cost, loss of working capital, loss of facilities for short term credit, credit restrictions creating the restructuring the existing debts, loss of employees and loss of major suppliers. Those borrowers who have a bad credit history cannot be the apt applicants for the ARC loans. And if the business is not looking viable, there is a big possibility of getting a loan.
Borrowers whose loans are already severely delinquent or whose past performance or future cash flow indicates that the business is not viable are not good candidates for an ARC loan. You must meet the SBA participant commercial vendor from whom you plan to get the loan. For getting the loan you must have an established relationship with a bank, must have been operating for more than two years, have clear financial statements etc. Overall if you have any financial hardships, you must go for ARC loans as the first option.
