The SBA (Small Business Administration) has come through with an emergency bridge loan program that has begun taking applications June 15, 2009. It is called the "ARC" (America's Recovery Capital) Loan.
This loan is up to $35,000 and can be used to pay off existing debt. These loans are interest free and no repayment is required for one year. The loan must be repaid within 5 years.
This is the first loan designed for struggling businesses. Per the SBA website it is for: "viable small businesses facing immediate financial hardship to help ride out the current uncertain economic times and return to profitability".
From the SBA: "ARC loans will be offered by some SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first".
"Your small business must be an established business, have financial statements demonstrating it was profitable in one of the past two years, and be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval. If your business does not meet these criteria, you can discuss your eligibility with your lender. ARC loans are not designed for start-up businesses.
Examples of qualifying loans may include credit card obligations for your business, capital leases, notes payable to vendors/suppliers, Development Company Loan Program (504) first lien loans, other loans to small businesses made without an SBA guaranty, and loans made by or with an SBA guaranty on or after Feb. 17, 2009.
ARC loans are designed to help businesses experiencing immediate financial hardship for reasons such as:
- 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 (intellectual capital)
- Loss/reduction of major suppliers (major suppliers out of business)
Borrowers whose loans are already severely delinquent or whose past performance or future cash flow indicates that the business is not viable are not good candidates for an ARC loan."
Onisko & Scholz, Certified Public Accountants is a full service CPA firm serving Southern California. We assist small and medium sized businesses with all financial aspects of their businesses from business planning, taxes, accounting to exit strategies. Call or email us today for more information on the SBA ARC loan or for a free consultation. 562-420-3100 ext. 216 losborne@oniskoscholz.com
