Small business owners may have a chance of getting a loan that could help pay for debts and the loan may be interest free. Applicants can apply for up to $35,000 and there would not be a repayment due for twelve months. The SBA (Small Business Administration) will be releasing more details later.
Business owners who may be eligible are those having some profit in one of the last three years and are experiencing financial hardships. The loan will be interest free for the business owner. Borrowers will only have to repay the principal amount.
This program is all part of the ARC (America's Recovery Capital) program. Business owners in a crunch are sure to apply but banks may not be so excitied to participate in the program. Banks are wondering what will be the incentive for them to participate.
Banks need answers before they make the decision to enter the program. They need to know what interest rate they will get paid and what happens if they approve a loan and the SBA voids the guarantee. Banks also do not want to have losses from loans that did not meet the SBA's requirements.
More information is needed for small business owners as well as banks. Banks may get the details about June 8, 2009 and borrowers may get information about June 15. Small business owners will need to apply with banks that participate in the program.
Borrowers can use the money to pay down a line of credit, a bank loan, or a credit card. They are not allowed to use the loan to make payments on a SBA backed loan made before February 2009. Small business owners who have barely been surving during the recession may welcome this loan.
Congress allowed over $200 million for the ARC loan program. If a borrower defaults on the payments, the government will take care of the bill. The prediction is that the ARC loans may benefit over 9,000 small businesses. While some banks view this as a way to further help their customers, other banks may not participate unless there are worth while incentives to participate.
Get ready small business owners if you need a loan, it may be available as early as late June. This loan may bring the needed financial relief to many small business so they are able to conduct business and be productive.
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