Free SBA Bridge Loans Start June 15


zero-percentIf your small business is hurting and needs help, the free money starts flowing on June 15. And yes, it really is free — as in interest-free and with no SBA fees attached.   Starting June 15, the U.S. Small Business Administration (SBA) will guarantee newly-authorized America’s Recovery Capital (ARC) small business bridge loans created under the economic stimulus and recovery act.

ARC bridge loans are deferred-payment loans of up to $35,000 available to established, viable, for-profit small businesses that are suffering hardship right now and need short-term help to make principal and interest payments on existing debt.  These loans are interest-free to the borrower (you), and 100 percent guaranteed by the SBA. Here’s how it works:

In addition to the loans being zero interest and fully guaranteed by the government, you don’t have to make any payments until a year after you receive the last of the funds, which will be disbursed within a period of up to six months. After the initial 12-month payment-free grace period, you’ll have five years to pay it off.  As with all SBA financing programs, the ARC loans will be made by commercial lenders, not SBA directly.  Banks and other commercial lenders who make small business loans should have information on the program available soon (although most aren’t even aware of it yet), and you can get updates at the SBA Recovery site as well.

Bridge loan funds to be used for payments of principal and interest on your existing business debt, which can include these things:

  1. Mortgages
  2. Term loans, both secured or unsecured
  3. Revolving lines of credit
  4. Capital leases
  5. Credit card debt
  6. Notes payable to vendors, suppliers and utilities

The key here, is whether your business will be deemed “viable.”   It’s not a big hurdle. Here’s how the SBA defines viable for getting one of these loans:

“A viable small business is one that has been profitable in the past, but is just beginning to struggle with making loan payments, and can reasonably project that it can get back on track with the infusion of ARC loan funds and the benefit of deferred payments.”

ARC loans will be available through SBA-approved lenders as long as the money holds out, or through September 30, 2010.


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13 Responses to Free SBA Bridge Loans Start June 15

  1. Pingback: Free SBA Bridge Loans Start June 15

  2. Lily Pham says:

    Everyone with a small business should take advantage of this offer.

  3. The banks will be given interest on the loans– although the percentage remains to be seen…the government will be paying it to the banks, and not the borrower.

    (then again… that makes this SBA ARC yet ANOTHER bank bailout!)

    the media missed this angle so far!

  4. Jacob says:

    This program will help some businesses with their existing non SBA backed debt but does nothing to help established businesses that are debt free but need capital to keep things going until this recession eases.

    http://www.ibigidea.com

  5. danien Harper says:

    I need to know how do I get an application for the bridge loan, my name is Danien Harper and my email is Danien2@aol.com

  6. Bob Cobb says:

    This program is a joke, I’ve already talked to a couple of major banks who say they have no interest in this SBA program. Lots of paperwork and no money to be made by the bank, so why should they participate? The SBA needs to get real and make these loans directly to small businesses, just like they do for disaster loans. After all, this is an economic disaster for small businesses.

    • Daniel Kehrer says:

      I wonder if the banks you talked to have actually read the details: The SBA will pay them market interest on the loan; they can charge a fee if they want to, and the SBA guarantees the loan 100%. Plus this is money that could keep other loans out of default. Sounds to me like bankers jumping to conclusions before they’ve even looked. Having SBA make loans directly is a poor way to go.

  7. Scott Allen says:

    Agreed, Daniel – it makes SO much more sense for the government to do things like this that leverage the money the government spends. Direct lending is crazy. Cover the interest, and in better times, cover the bank’s risk. But let the banks provide the actual capital.

    A lot of people don’t realize that the Bush administration cut the SBA budget by roughly 50% over eight years — more than any other federal agency. Crazy.

  8. Neal Gordon says:

    One big problem for borrowers is locating a loan from a lender who is not their bank. Many of the banks want to provide loans to current customers only, especially if they hold a loan from that customer. Also, many banks have additional requirements for the loans beyond what the SBA has required. But not one of the banks is happy about having to process and underwrite a loan package for a $35,000 loan that requires nearly as much information as a needed for a regular sized SBA 7(a) loan.

    My company, Business Borrowers Alliance, is contacting the large and mid-sized banks to learn if they are participating and what their specific requirements are. We provide direct assistance and help to businesses throughout the complete ARC Loan application process. For more information, contact us at 866-944-3866 or mail@businessborrowersalliance.org

  9. is it better to dealer with a broker or a bank for a personal loan?

  10. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be subscribing to your feed and I hope you post again soon. :)

  11. Small businesses need all the help they can get and SBA loans are really something they should look into. ARC loans sounds like a good idea.

  12. Emule Review says:

    lol nice post, do you do guest posts?

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