Learning about ARC Program Loans

Businesses all over the world have faced headwinds due to the global economic slowdown and none have been hit harder than small businesses. Fortunately, the United States Small Business Administration has a program which provides short term funding for those who have felt the effects of the sluggish economy.

Small businesses know better than any other how important it is to have a constant cash flow. It doesn’t have to be substantial but the old cliché, it takes money to make money is a day in the life of many of America’s small business owners.

Before a business is paid, they must first invest capital in to a project and if other clients are slow to pay or the economy has slowed to the point where short term cash flows are inadequate, a small business can get in to a vicious cycle of only paying past debt which doesn’t allow growth to occur.

The United States Small Business Administration has lent more than $11 million in short term funding through the ARC loan program. The ARC, or America’s Recovery Capital loan program was created with stimulus money to assist businesses with short term funding issues brought about by the economic slowdown. This program will be offered until all money is depleted or September 30^th, 2010,whichever comes first. For this reason, time is running out for this loan program.

Think of ARC funds as a loan for loans. The funds are available to assist the small business owner in making principal and interest payments on current loans for a period of up to six months. Often, a business will be paralyzed because there isn’t enough money available to find more clients, bid on projects, or other business activities that grow the business. By assisting with loan payments, funds can now be directed towards growing the business instead of servicing debt.

What makes the ARC loans so attractive is the 0% interest rate and their 12 month payment deferral rate so the business owner can spend a year concentrating on growing the business. Last, loan payments can be made for up to five years.  The maximum loan amount is $35,000.

The loans also carry a 100% guaranty from the SBA to the lender so qualifying for the loan is easier since the lender is sure to get all of their money back.

Who should consider applying for an ARC loan? They are primarily meant for businesses who have been profitable in the past and due to a slowing economy, have hit a period of financial hardship preventing them from paying anything other than loan payments.

To apply, the small business owner must be prepared to show evidence of past positive cash flow. Two years of business records will be required to substantiate this claim as well as other financial documentation as required by the lender. Small business owners can apply at any bank who is a member of the SBA. A list of qualifying financial institutions can be found on the SBA website.

Don’t let the economy claim your business. Hurry, time is running out on this loan which such favorable terms.