SBA Arc Loan program guidelines

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About the ARC Loan Program

ARC loans can be used to make payments of principal and interest, in full or in part, on one or more existing, qualifying small business loans for up to six months. ARC loans provide an immediate infusion of capital to small businesses to assist with making payments of principal and interest on existing debt. These loans allow borrowers to redirect cash flow from making loan payments to investing in their businesses, to help sustain the business and retain jobs. For example, making loan payments on existing loans with proceeds from an ARC loan can allow a business to focus more funds on core operations, such as buying inventory or making payroll.

ARC loans are interest-free to the borrower, carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to SBA. Loan proceeds are provided over a six-month period and repayment of the ARC loan principal is deferred for 12 months after the last disbursement of the proceeds. Repayment can extend up to five years.

The best candidates for ARC loans are small businesses that in the past were profitable but are currently struggling, yet have been making loan payments or are just beginning to miss loan payments due to financial hardship. ARC Loan FAQs for Borrowers.

ARC loans are made by commercial lenders who are SBA participants. The SBA will pay these banks a monthly interest rate throughout the term of the loan. Lenders can find more information here. Non-SBA lenders can easily become SBA participants by working with their nearest SBA district office. Businesses interested in applying for an ARC loan should first contact their current lender.

ARC loans will be offered by some SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first.

link
http://www.sba.gov/recovery/arcloanprogram/REC_WHATISARCLOAN.html

SBA ARC Fact sheet PDF

http://www.sba.gov/idc/groups/public/documents/sba_homepage/rec_arcloan_faq_borrowers.pdf

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ARC Loan Eligibility

ARC loans are available to viable, for-profit small businesses in the U.S. that have qualifying small business loans and are experiencing immediate financial hardship.

Your small business must be an established business, have financial statements demonstrating it was profitable in one of the past two years, and be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval. If your business does not meet these criteria, you can discuss your eligibility with your lender. ARC loans are not designed for start-up businesses. ARC Loan FAQs for Borrowers.

Examples of qualifying loans may include credit card obligations for your business, capital leases, notes payable to vendors/suppliers, Development Company Loan Program (504) first lien loans, other loans to small businesses made without an SBA guaranty, and loans made by or with an SBA guaranty on or after Feb. 17, 2009.

ARC loans are designed to help businesses experiencing immediate financial hardship for reasons such as:

* Loss/reduction of customer base
* Increase in cost of doing business
* Loss/reduction of working capital and/or loss/reduction of short term credit facilities
* Inability to restructure existing debts due to credit restrictions
* Loss/reduction of employees (intellectual capital)
* Loss/reduction of major suppliers (major suppliers out of business)


Borrowers whose loans are already severely delinquent or whose past performance or future cash flow indicates that the business is not viable are not good candidates for an ARC loan..

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SBA has an Online course to help you fill out and apply for their loan packages.

Link: http://web.sba.gov/sbtn/registration/index.cfm?CourseId=28

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Information & Discussion to help applicants optimize their chances of obtaining the loan and locating the lenders; To register or for more info, please go to

http://businessborrowersalliance.org/ARC_Loan_Webinar_Registration.html

My company provides advise and direct assistance with SBA ARC Loan applications. We also know a lender in the MD/DC/VA area that will participate with new customers & that has been the biggest challenge nationwide.

This will be a free webinar to discuss the eligibility rules and qualifications of the program, as well as how it has really worked in the first 2.5 months. (Yes, we will have a few minutes at the end about our serivces...nothing is totally free :grin:)

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Thank You Neal. I registered for the webinar and will bump this thread as the dates get closer.

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Neal there is also a SBA loan program for veterans??

Do you have any information on that?

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6 Ways to Speed Up SBA Loan Approval

By Diana Ransom

Attention small-business owners: Time is running out on an opportunity to access fee-free business loans that are guaranteed up to 90 percent.

Earlier this year, the Small Business Administration set aside $375 million to temporarily eliminate loan fees and increase the agency's loan guarantee to 90 percent for certain loans. The moves were part of the American Recovery and Reinvestment Act (ARRA), which was signed into law by President Obama in mid-February. So far, the SBA has used about 55 percent of those funds; they have translated to $6 billion in loans under the 7(a) and 504 programs, says John J. Miller, an SBA spokesman.

However, barring another act of Congress, SBA-backed loans will revert to their pre-Recovery Act status by the end of November or December, Miller says. The impact will be palpable. Loans made once the funds run out will only get a 75 percent to 85 percent guarantee, down from 90 percent. The decrease will make it tougher to get approved for a loan because lower guarantees raise a bank's risk, says Eric Grimstead, a business advisor at the Center for Economic Vitality at Western Washington University in Bellingham, Washington. In addition, business owners taking out loans through the SBA loan will have to pay a 2 percent to 3 percent loan guarantee fee again, he says.

November is still a ways away, but given that the SBA loan approval process can take as long as 120 days, applicants had better get cracking, says Dave Mulcahy, the director of the Small Business Development Center at Lamar University in Beaumont, Texas.

Here are six ways to speed up the application process for SBA loans

Update your financials
To accelerate a loan's approval, prepare and provide at least three years of tax returns and up-to-date financial statements, including income and cash-flow statements, balance sheets and sales projections, says Tom Burke, the senior vice president of Wells Fargo SBA lending in Minneapolis. If you don't have a business plan, write one. And if you don't have a marketing plan, write one of those too, he says. "Business owners have to be able to show that they can pay everyone back," Burke says.

Tap a preferred lender
Use a preferred SBA lender such as TD Banknorth or KeyBank, Grimstead says. Conventional wisdom says business owners should consult a bank with which they already work, but if that institution doesn't currently work with SBA loan programs, the process can take weeks longer than comparable loans at SBA-ready lenders, he says. Not only is there a massive learning curve when working with SBA programs, which are complex and change frequently, but nonpreferred lenders also have to send loans in to the SBA for approval, which can take up to four weeks, Burke says. Conversely, preferred lenders are generally able to underwrite their own SBA loans, he says.

Ensure the right fit
When scanning the list of preferred lenders, find ones that cater to businesses like yours, Burke says. For instance, some banks won't authorize SBA loans to startups. Others may avoid restaurants or other similarly risky ventures, he says. Also, take into account differences in banks' credit policies. For instance, Wells Fargo will extend a real estate loan for 25 years, but other banks do so for just 20 years.

Hedge your bets
Even if you secure the word of a preferred lender, make sure you've applied to a couple other banks as backups, Grimstead says. "Some borrowers get three or six or even 12 weeks into the process only to get a 'no' from someone at the bank," he says. To slash your risk of rejection, apply to a few different banks at the same time. (Note that going through the application process at several banks will not harm your credit, says Mulcahy, from the SBDC in Beaumont, Texas.)



Offer more backup
SBA loan programs often require less of a down payment than typical business loans, says Becky Naugle, the state director for the Kentucky Small Business Development Center at the University of Kentucky in Lexington. For instance, banks providing normal business loans might require owners to put 20 percent to 40 percent down, but banks working through an SBA program might require just 10 percent down. Despite this lower standard, consider putting more down or offering some sort of personal guarantee, she says. "If particularly risky business owners can mediate a risk by having a personal guarantee, that could push it through faster," she says.



[B]Get help
An experienced business advisor can also help push your company's loan through quicker, Burke says. Check out a local Small Business Development Center, or tap a volunteer business professional in your area via SCORE, a nonprofit business counseling service, he says. There's also at least one SBA district officer in each state whom business owners can ask questions about SBA loans.

Write to Diana Ransom at dransom@smartmoney.com