SBA ARC Loan Program

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If your small business is stressed meeting expenses during these economic times, the U.S. Small Business Administration has a new loan program that you might find beneficial and worth investigating. SBA's America's Recovery Capital Loan Program can provide up to $35,000 in short-term relief for viable small businesses facing immediate financial hardship to help ride out the current uncertain economic times and return to profitability. Each small business is limited to one ARC loan.

ARC loans will be offered by some SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first.

Loan Structure

  • An ARC loan is a deferred-payment loan of up to $35,000.
  • ARC loans will be used to make up to six months of principal and interest payments on qualifying loans for existing viable for-profit small businesses in the United States.
  • Disbursement period (up to six months) is followed by 12 months with no repayment of the ARC loan principal, followed by a repayment period of five years. SBA pays monthly interest to the bank.

How Lenders Benefit

  • Reduced Risk: 100 percent guaranty provides greater security and confidence to lend.
  • Guaranteed Interest: SBA will pay monthly interest to the lender at reasonable rates throughout the term of the loan.
  • Conventional, commercial business loans (and SBA-guaranteed loans made on or after Feb. 17, 2009) are an eligible use for ARC loan proceeds.
  • Proceeds may be used to pay on mortgages, secured and unsecured loans, lines of credit and credit cards if the debt was used for eligible business purposes under the program.
  • SBA turnaround on non-delegated loan applications - expected within five to ten business days.

For more information on the ARC Loan Program, click on SBA's America's Recovery Capital Loan Program.

For more information, click on American Recovery and Reinvestment Act of 2009 (Recovery Act).

According to an article in the Wall Street Journal, June 20, 2009, it might be difficult for the SBA to convince some banks to offer this loan because the expenses in preparing the paperwork and costs in processing these loans may make it unprofitable for the banks.

Locally, the Wall Street Journal reported that PNC was accepting applications for the ARC loans. Other local banks may also be participating, please check with your bank to gain assistance if your interested in this program or they can direct you to an SBA lender accepting applications.