In these hard economic times, many small businesses are struggling to make ends meet or just to stay in business. Many small businesses were already on the financial bubble before this “great recession” hit. Most of those businesses are gone now and many of the small businesses that were doing well before the recession hit, are now in jeopardy. If this second group is you and your business, you may be able to get help to help tide you over until you back on your feet.
The Small Business Administration (SBA) has a program called America’s Recovery Capital (ARC) Loan Program, According to the SBA website, the ARC 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”. These loans are available through some SBA lenders until September 30, 2010 or until funds run out, whichever comes first. These funds are not available for small business start-ups.
These loans are to be used to make payments on existing loans for a maximum of six payments followed by a twelve month no payments period. Interest payments are being picked up by the SBA. After the twelve month no payment period you will have five years to repay the loan.
Why would the SBA approved lenders want to loan you the money? Very simply put, the loans are guaranteed by the SBA, thus reducing the risk by the lenders. Plus the SBA is paying the interest on the loans which makes it a win-win situation for all.
These loans may be used to pay mortgages, existing loans, and lines of credit with your venders and even business related credit cards.
As with any loans, especially government loans, there are hoops you must jump through, providing financial statements, including balance sheets, income statements, and cash flow statements that show you had at least one positive cash flow year out of the past two years. In addition you will need to show the next two years are survivable enough to make ends meet and help you recover from the recession period. ARC loans also require you to provide your Data Universal Numbering System (DUNS) Number issued by Dun & Bradstreet. You can find or request, if you do not have one, your DUNS number at https://fedgov.dnb.com/webform .
This whole process, provided you have all of your ducks in a row, should take about eight to ten days, via you lender.
There are always going to be nay-sayers complaining about their tax money going to waste, but the truth is these loans are meant to keep small businesses open, be a boost to the local economy, and maybe create a few new jobs.
Tip: These funds, as mentioned earlier are for a limited time so begin the process as soon as possible.
Reference: U.S. Small Business Administration, http://www.sba.gov/