Small Business Administration Rolls Out New Loan Program

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Booksellers can hear about the ways that they can gain access to capital at BEA session on the Economic Stimulus Package

This week, the Small Business Administration (SBA) announced that it has launched a new program to help businesses in this difficult economic climate, the America's Recovery Capital (ARC) loan program, which carries a 100-percent guarantee from the SBA to the lender. Small businesses suffering financial hardship as a result of the slow economy may be eligible to receive temporary relief to keep their doors open and get their cash flow back on track through the program, which was announced this week by SBA Administrator Karen G. Mills.

Booksellers can find out how to take advantage of ARC loans and other small business programs in the Recovery Act to garner much needed capital at ABA's session, "How SBA and the Federal Stimulus Package Can Help Your Business," to be held at BookExpo America on Saturday, May 30, from 10:30 a.m. - noon, at the Javits Convention Center. The featured speaker at this important event is Ana M. Ma, chief of staff at SBA.

ABA encourages any bookseller who has taken advantage of SBA loans via the Recovery Act and who would like to share the experience with other booksellers at SBA session at BookExpo America or in Bookselling This Week to contact ABA Public Policy Liaison David Grogan at [email protected].

Regarding the ARC loan program, beginning on June 15, SBA will start guaranteeing ARC loans. ARC loans are deferred-payment loans of up to $35,000 available to established, viable, for-profit small businesses that need short-term help to make their principal and interest payments on existing qualifying debt. ARC loans are interest-free to the borrower, 100 percent guaranteed by the SBA, and have no SBA fees associated with them.

"These ARC loans can provide the critical capital and support many small businesses need to make it through these tough economic times," said Administrator Mills in a statement. "Together with other provisions of the Recovery Act, ARC loans will free up capital and put more money in the hands of small business owners when they need it the most. This will help viable small businesses continue to grow and thrive and create new jobs in communities across the country."

As part of the Recovery Act, the ARC program was created as a no-interest, deferred payment loan to help small businesses that have a history of good performance, but as a result of the tough economy, are struggling to make debt payments.

ARC loans will be disbursed within a period of up to six months and will provide funds to be used for payments of principal and interest for existing, qualifying small business debt including mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payable to vendors, suppliers, and utilities. Repayment will not begin until 12 months after the final disbursement. Borrowers don't have to pay interest on ARC loans. After the 12-month deferral period, borrowers will pay back the loan principal over a period of five years. ARC loans will be made by commercial lenders, not SBA directly.