The U.S. Small Business Administration (SBA) has a loan program that may help small businesses faced with short-term cash problems. SBA’s America’s Recovery Capital (ARC) Loan Program can provide up to $35,000 in short-term relief for viable small businesses facing immediate financial hardship, to help ride out current uncertain economic times and return them to profitability.
ARC loans may 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, providing an immediate infusion of capital to help with existing debt. The loans allow borrowers to redirect cash flow from making loan payments to investing in their businesses and helping to retain jobs. As an example, using ARC funds to make loan payments on existing loans could allow a business to focus more funds on core operations, such as buying inventory or making payroll.
Interest-free to the borrower, ARC loans carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to the 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 last up to five years. To be eligible, a small business must be an established business (not a start-up), have financial statements demonstrating profitability in at least one of the past three years, and be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval.
ARC loans are made by commercial lenders who are SBA participants. (Non-SBA lenders may become SBA participants by working with their nearest SBA district office.) Businesses interested in applying for an ARC loan should first contact their current lender.