The long anticipated SBA emergency bridge loan program will begin taking applications June 15th. It will offer loans of up to $35,000, and unlike many of the other recent lending initiatives, the money can be used to pay back existing debt.
As CNN reported, SBA Administrator Karen Mills announced the launch date of the program during a kick-off speech for National Small Business Week. In her words, these loans are for businesses “in a situation where they just need a little extra help to bridge the troubled waters.”
Dubbed “ARC” (America’s Recovery Capital) loans, these loans were authorized in January’s stimulus package. They will offer businesses with immediate financial hardship up to $35,000 in interest free loans that may be used to pay existing debts. No repayment is required for one year, and borrowers will have five years to repay.
The SBA has responded to the downturn with multiple lending initiatives, each aiming to entice lenders to participate and lend small businesses much needed capital. However, as discussed in our preview of the ARC loans, some have criticized the SBA’s crisis response, arguing that (newly) risk averse banks have been in no hurry to lend to small businesses with any trouble spots in their loan applications.
Businesses on the brink have been looking for assistance that will help them immediately. Up to now, the SBA loan enhancements have been for loans that can’t be used to pay down existing debt.
- SBA offers interest-free loans to struggling businesses (The Business Journal of Milwaukee)
- Emergency small business loans coming in June (Wall Street Journal)
- Small Businesses not Receiving SBA Loan Stimulus; 5 Tips on Getting SBA Loans (FindLaw’s Free Enterprise)
- Business Accounting & Financial Management (FindLaw)
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