This doesn't seem to have gotten a lot of publicity, but Kos small business owners who are struggling to make payments on outstanding debt should be aware of a provision in the 2009 Recovery Act that allows them to borrow up to $35,000 from SBA lenders interest free. I'm not sure why this hasn't gotten more press: I checked the Chamber of Commerce website and don't see anything there; ditto with the National Association for the Self-Employed. I certainly haven't heard much about it in the main-stream media.
Hubby and I were alerted to the America's Recovery Capital (ARC) loan program by a colleague who is in the same line of work. In brief, a "viable" small business that is experiencing financial difficulty with cash flow may apply for a deferred-payment loan of up to $35,000 which can only be used to make principal and interest payments on qualifying debt/loans. Not only are there no interest charges to the borrower, there are also no fees (which anyone who has borrowed via an SBA loan knows can be hefty.) From the SBA website:
ARC loans are interest-free to the borrower, carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to 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 extend up to five years.
It is important to note that these loans are not for starting a business, nor are they for businesses which cannot prove that they have reasonable chance of success for the next two years. They are also not for businesses that cannot prove that they have suffered a down-turn in business, through decreased sales, increased costs, loss of availability to credit, among other reasons. But for those businesses that have been affected by the disastrous financial climate brought about by the Bush Administration, it seems to be a pretty good program (albeit temporary) to help small businesses weather the bad times.
Caveat:
ARC loans will be offered by some SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first.
That means finding a lender before funds run out. More information is available here: http://www.sba.gov/...