The American Capital Recovery or ARC Loan for small business debuted on June 15, 2009. It is part of the 2009 Recovery Act, President Obama's economic stimulus plan. This loan is targeted at small business and it is set up to help small business pay off existing debt and free up cash. The ARC loan recognizes the burden under which small business has been suffering during the economic recession, particularly with regard to meeting expenses, and is set up to help.
Qualifying for the ARC Loan Program
The SBC ARC Loan Program is set up for existing businesses, specifically those that have been profitable at least one out of the last two years. New or startup businesses are not eligible for ARC loans. ARC loans are especially targeted at firms who have been meeting expenses, such as loan payments, but are now beginning to miss payments and need help.
What is an ARC loan?
A small business, eligible for an ARC home, can apply for up to $35,000 and use it to pay off mortgages, loans, lines of credit, and credit cards. The loan is fully guaranteed by the Small Business Administration and there are no fees associated with it. It is interest-free and the borrower has five years to repay with the first payment deferred for one year. Repayment can extend over five years.
How and where to apply for an ARC loan
Your next step is to contact a lending institution that participates in the Small Business Administration programs. The SBA provides a list of questions a lending institution may ask you. Be prepared for these questions before you contact your lending institution.
ARC loans are available under September 30, 2010 or until the money for the program runs out, whichever comes first.
Here is a list of active banks making ARC loans.
Up to this point, it has been very difficult for business owners to obtain ARC loans. In August, 2009, only 1,000 loans had been completed and only 400 lenders participated. These lenders agreed to participate, but many of them participated in name only. Paperwork requirements for small businesses are huge and turndowns are commonplace.
In September, 2009, activity picked up. More lenders got on board and 2,715 loans were made. Wells Fargo is the most active lender. U.S. Bank has decided to pass on the program. After taking months to study the program, Bank of America has finally decided to join the program.
Business owners are understandably angered by these delays, particularly since the Wall Street financial firms were helped so quickly in the fall of 2008. The ARC loans were supposed to be emergency, lifeline loans for small businesses.
