Free Money? SBA Offers Help for Small Businesses

You may have read the recent Washington Post article (July 11, 2009) about the White House proposal to use bailout funds to increase the amount of “working-capital” loans the Small Business Administration (SBA) provides small businesses under its popular 7(a) loan program.

However, a program is already in place at the SBA which aims to offer relief to small businesses in the total amount of $35,000.00. If a firm is eligible to receive the loan from a commercial bank, then the SBA will fully guarantee the loan and waive its typical fees. These “ARC loans” are interest-free to the borrower for the life of the loan. Repayment of the principal can be deferred for 12 months after the last disbursement of proceeds. Repayment of the total balance of the loan can extend for up to five years.

To be eligible, the borrower must have been in business for at least two years and be able to show that it was profitable at least one of the two years. If the firm was open for less than two years, it needs to have been profitable all of the time it was open.

You may ask, “Why would a business need a loan if it was “profitable?” Well, the answer is that the SBA is offering to help businesses with a bit of “relief funding” to help them get over the hump due to slowing sales that may make it harder to meet existing loan payments, vendor payments or even payroll.

So, if you think this may be of interest to you or a small business owner you may know, contact Barbara Berschler at Press, Potter & Dozier, LLC, (301) 913-5200. She will give you more particulars and put you in contact with a local bank that is interested in participating in this special loan program.

Keywords: small business, loan, financing, small business loan, sba, sba 7(a) loan, sba 7(a), 7(a) loan