The Small Business Administration has begun offering interest-free loans of up to $35,000 to small businesses through SBA-approved lenders.
The American Recovery Capital loan program was established as part of the American Recovery and Reinvestment Act, the stimulus bill that President Obama signed in February, but the loans just became available on Monday. They are intended as short-term relief to viable small businesses facing immediate financial hardship to help them ride out the current uncertain economic times and return to profitability. Each small business is limited to one ARC loan.
Rep. Nydia M. Velázquez, D-N.Y., hailed the arrival of the new recovery loans and called for speedy implementation of more small-business lending programs. There are many businesses that have great potential, but they need a little boost to make it through the current rough patch, she said in a statement. That is why we included this program in the Recovery Act: to give small businesses some breathing room, so they can keep the lights on, meet payroll and, eventually, put Americans back to work.
The loans will be made by commercial lenders and can be used for payments of principal and interest for existing qualifying business debts like credit card obligations, mortgages, lines of credit, and balances due to suppliers, vendors and utilities. Funds borrowed through the program are provided interest-free and borrowers have one year before repayment needs to begin.
Businesses that are experiencing immediate financial hardship, but deemed by the SBA to be otherwise viable, will be eligible for the loans. Velázquez said that, in addition to the new ARC loans, her committee is pressing the SBA to swiftly implement other provisions in the Recovery Act that will help small companies access capital. In addition to the ARC loans, the Recovery Act increases the percentage of a loan that the SBA can guarantee, makes SBA-backed loans more affordable, and provides tools to unfreeze the small-business credit markets, helping small companies access capital at affordable rates.
To apply for ARC loans, businesses should visit a local SBA-approved small-business lender. The loans will be available through Sept. 30, 2010, or until appropriated funding runs out. Additional information about the ARC loan program is available at www.sba.gov/recovery/arcloanprogram/index.html.
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