New SBA $35,000 ARC Interest-Free Loans Provide Relief

Lenders have begun accepting applications for the new loan program guaranteed by the Small Business Administration. The America’s Recovery Capital (ARC) loan is a 100% guaranteed loan expressly for existing businesses experiencing financial hardships. The loan is interest free to the borrower and repayment begins 12 months after the last disbursement is made so most loans will have repayments starting 18 months from loan closing. The program comes with many rules and restrictions including:

• The business must be "viable", defined as having been "profitable" or "cash flow positive" in one of the last 2 years (Implying the business must be more than 2 years old)
• The business must be able to demonstrate "financial hardship", demonstrated by events like decrease of revenues, customers, credit or other negative business events
• The Loan is to only be used for & paid directly to specific types of business debt including Business Loans like Mortgages, Lines of Credit, Capitol Leases, Unsecured Loans & Business Credit Cards; In addition, Personal Credit Cards and Home Equity Loans that have been totally or partially used for business may be eligible. However, the requirements for documentation and verification of business use are VERY STRINGENT.

The loans will be paid in 6 monthly installments to the debt holder, not directly to the borrower.

Banks and credit unions are eligible to participate, but actual participation is varied across the country. Some banks have chosen not to participate at all. Some are only working with their own customers and that can even be restricted to only customers with debt at the bank. A few are working with non-customers. Banks aren’t allowed to charge fees to borrowers, which makes this loan program a low profit or unprofitable program for them.

For more information, visit sba.gov.

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Neal Gordon is a partner with Business Borrowers Alliance. The company provides financial consulting services for small businesses seeking help acquiring SBA Loans or with SBA Loan Modifications. They are specialists with the SBA $35,000 ARC Loan program, providing guidance and direct assistance to borrowers throughout the complete loan application process. Call 866-944-3866.