SBA Clarifies Debts Eligible Under ARC Loans

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The Small Business Administration (SBA) has recently answered a question regarding which loans and debts qualify for payment under an American Recovery Capital (ARC) loan.

ARC loans of up to $35,000 are designed to give viable small businesses suffering immediate financial hardship some temporary financial relief so they can continue operations and improve cash flow. The loans will be available through SBA-approved lenders as long as funding is available or through September 30, 2010, whichever comes first.

Loans that can be paid with an ARC Loan include "notes payable to vendors/suppliers/utilities." SBA noted that ARC loans are not "working capital" loans to pay accounts payable or other operating expenses for a small business. However, SBA also noted that relieving a business of the burden to make loan payments frees up cash flow, which makes it available for the operating expenses of a small business.

Information on the ARC loan program is available here. More information on SBA is available here. And details about key changes in SBA's 504 loan program are available here.

Booksellers who would like to share their experiences with the ARC loan program with ABA should contact David Grogan, the ABA's public policy liaison.