Short Term Loans Available from Small Business Administration

Released June 3, 2009

On June 15, the Small Business Administration (SBA) will open up a new temporary loan program. America’s Recovery Capital (ARC) loans of up to $35,000 can be used to make payments of principal and interest in full or in part, on one or more existing qualifying small business loans for up to six months. According to the SBA, “These loans allow borrowers to redirect cash flow from making loan payments to investing in their businesses, to help sustain the business and retain jobs. For example, making loan payments on existing loans with proceeds from an ARC loan can allow a business to focus more funds on core operations, such as buying inventory or making payroll.

In order to qualify, the small business must be an established business, have financial statements demonstrating it was profitable in one of the past three years, and be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval. ARC loans are interest-free to the borrower, carry a 100 percent guaranty from the SBA to the lender and require no fees paid to SBA. Loan proceeds are provided over a six-month period, and repayment of the ARC loan principal is deferred for 12 months after the last disbursement of the proceeds. Repayment can extend up to five years.

The first step is to contact your current lender as ARC loans are made by commercial lenders who are SBA program participants. Non-SBA lenders can participate by working with their nearest SBA district office. For more information, visit www.sba.gov/recovery/arcloanprogram/index.html.

For more information, contact Dave Krugman, AFS PR & marketing coordinator, at 800/537-4237 x286, or dkrugman@afsinc.org.