The America's Recovery Capital loan program was presented by the Small Business Administration starting June 15, 2009, to help small businesses "facing immediate financial hardship" during the recession. The loans will be offered until September 30, 2010, or as long as funds last, whichever comes first.
Features of the Loans
The loans are available interest-free to borrowers, and they are 100% guaranteed by the SBA, with no fees to the borrower. The SBA does not provide the loan, but it guarantees a bank loan which you must qualify for. The borrower has up to five years to repay the loan.
Qualifications/Eligibility
The qualifications for the program include:
- The loans are for existing businesses, not for start-up funding. Eligible businesses have been operating for two years or more.
- The purpose of the loan is to help the small business make payments on an existing loan.
- Once the ARC loan is approved, proceeds are distributed over a six-month period.
- To be eligible, the SBA states, the business "must be an established business, have financial statements demonstrating it was profitable in one of the past two years, and be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval."
- Examples of loans which might qualify include credit card debt, leases, SBA 504 loans, and other non-SBA guaranteed loans
- The only SBA-guaranteed loans which qualify for the ARC program are those loans made by or with an SBA guaranty on or after Feb. 17, 2009.
- Loans which are already "severely delinquent" are not eligible for this program. You must be able to show that you can repay the loan within the next two years using the cash flow of your business.
As with other SBA and non-SBA loans, you will need to prepare your financial statements and a business plan to show your ability to repay this loan and continue to operate your business profitably.
For more information and a list of questions to ask yourself about your ability to qualify for the ARC emergency loan, see the SBA loan application question list.
Check out my article on SBA preferred and certified lenders for a list of lenders in your area.
