The Small Business Administration in a bid to help struggling small businesses climb out of the recession has started guaranteeing loans up to $35,000 to help keep their doors open and get them back on track.
The loans are offered under a temporary new program called America’s Recovery Capital (ARC) and are designed to provide a “bridge” for viable small businesses with immediate financial hardship.
“SBA expects to make approximately 10,000 ARC loans for a total of about $35 million,” said David Hall, Public Affairs Specialist at the SBA.
ARC loans are guaranteed by the SBA and are available to viable, for-profit small businesses that need short-term help to make their principal and interest payments on existing and qualifying business debt.
Loans will be disbursed over a period of up to six months from commercial lenders, not the SBA directly. Qualifying small business debt includes: mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payable to vendors, suppliers and utilities.
Small businesses start repayments 12 months after the final disbursement paying back only the principle and the SBA will pay the interest at the variable rate of prime plus two percent.
Small Businesses have up to five years to pay back the principle.