SCORE Cincinnati

During our all member training day last Saturday we talked of may things. We had breakout sessions in several specialized areas such as Client Resources, First Contact, Technology Issues and Client Financing.

One takeaway that I had from the Client Financing session was the SBA’s introduction of the ARC (America’s Recovery Capital) loan.

In simple terms, if a small business is buried in short term debt as sales decline and vendors and suppliers need cash from you then a small business owner can borrow a limited amount of money over a limited amount of time to service the business’ short term debt.

The business must have been in business for at least two years.

ARC loans can be used to make payments of principal and interest, in full or in part, on one or more existing, qualifying small business loans for up to six months. ARC loans provide an immediate infusion of capital to small businesses to assist with making payments of principal and interest on existing debt.  These loans allow borrowers to redirect cash flow from making loan payments to investing in their businesses, to help sustain the business and retain jobs.  For example, making loan payments on existing loans with proceeds from an ARC loan can allow a business to focus more funds on core operations, such as buying inventory or making payroll.
< More info click here for SBA website >

The best candidates for an ARC loan are likely to be businesses that have been around for several years, have been profitable in the past but are now struggling. The maximum loan size is $35,000.00 and ARC loans are interest-free to the borrower, carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to SBA.  Loan proceeds are provided over a six-month period and repayment of the ARC loan principal is deferred for 12 months after the last disbursement of the proceeds.  Repayment can extend up to five years.

I do have at least one client that may qualify for ab ARC loan. I’d be interested in learning from others in the Cincinnati about their experience and thoughts about the ARC loan program.

Related Links

• The SBA ARC Loan Website
• Arizona Star – Current News Article
• CNN Money – Article from 2009