If you’re in a cash crunch because of debt servicing, there may be relief available. The SBA has announced a new American Capital Recovery (ARC) program under which small businesses can borrow up to $35,000 interest free. Loan proceeds can be received over a six-month period; repayment of principal is deferred for 12 months after the last disbursement of the proceeds and can be extended up to five years.
This temporary lending program is designed to help ease the commercial credit crunch (made worse by Advanta’s elimination of small business credit cards starting June 10). ARC loans are limited to small businesses with outstanding loans (credit cards, notes payable to vendors, capital leases, and certain other types of borrowing) and that are experiencing immediate financial hardship (declining sales, difficulty in paying expenses, etc.).
The program is not for start-ups (you must be in business for a minimum of two years) and loans will not be given to small businesses that are already seriously delinquent in outstanding loan payments.
The ARC program is set to start on June 15. Loans are made by commercial lenders (not directly by the SBA); they are 100% guaranteed by the SBA. The program will continue until September 30, 2010, or when funds run out, whichever is first.