Emergency Help from the SBA

Is your business having temporary trouble making ends meet? If so, the ARC loan program, sponsored by the Small Business Administration (www.sba.gov) as part of the American Recovery and Reinvestment Act of 2009, is designed to help.

The ARC program provides immediate interest-free loans of up to $35,000 to eligible small businesses. The loans are distributed to the small business owner over 6 months, and repayment does not start for 1 year after the last distribution. The business then has 5 years to pay off the loan principal. The loans are provided by participating commercial banks, but are 100% guaranteed by the SBA. Additionally the SBA, not the business owner, pays interest to the bank.

The purpose of the ARC loan is to help established small businesses with good long-term prospects that are suffering temporary hardships to ride out the storm. To qualify a business must demonstrate its hardship—for example, loss/reduction of customer base, increase in cost of doing business, loss/reduction of working capital and/or loss/reduction of short term credit facilities, inability to restructure existing debts due to credit restrictions, loss/reduction of employees or loss/reduction of major suppliers. Additionally the business must demonstrate profitability in one of the last two years, and project sufficient future cash flow to repay the loan.

An ARC loan can be used exclusively for paying off qualified loans, and not for any other business expense. Qualifying loan types include credit card obligations for your business, capital leases, notes payable to vendors/suppliers, and other loans made without an SBA guaranty.