SBA ARC Loan Program Provides Up To $35,000 to Small Businesses

If you run a small business that's in need of some capital, the Small Business Administration (SBA) will launch a new loan program beginning June 15, 2009. Called the America’s Recovery Capital Loan Program, or ARC loan for short, SBA's loan program can provide up to $35,000 in short-term relief for viable small businesses facing immediate financial hardship to help ride out the current uncertain economic times and return to profitability. Each small business is limited to one ARC loan.

An ARC loan is designed to help small businesses make payments on one or more existing small business loans. ARC loans enable borrowers to redirect cash flow from making loan payments to investing in their businesses, to help sustain the business and retain jobs. ARC loans pay the principal and interest on existing loans for up to six months. The loans are interest free, and repayment of the loan can be deferred for up to 12 months after the final loan disbursement is made. Repayment of the loan can be extended up to 5 years.

According to the SBA, the best candidates for ARC loans are "small businesses that in the past were profitable but are currently struggling, yet have been making loan payments or are just beginning to miss loan payments due to financial hardship."

ARC loans are not processed by the SBA. Instead, commercial lenders make the loans to small businesses. To encourage banks and lenders to extend these loans, repayment is 100% guaranteed by the SBA. Thus, commercial institutions have zero risk of loss.

If you are interested in an ARC loan, you can contact your financial institution beginning June 15.