New SBA Loan Program Can Help Construction
Industry
A new federal loan program may provide some measure of relief for small
businesses whose cash flow has been impaired as a result of the economic
downturn. America's Recovery Capital (ARC) loan program was created by the
U.S. Small Business Administration (SBA) to offer no-interest,
deferred-payment loans of up to $35,000 to qualified small businesses.
The loans are intended to help small businesses experiencing immediate
financial hardship. Eligible contractors that have been making loan payments
but are presently struggling can use SBA ARC loans to make payments of
principal and interest on existing loans, lines of credit, business credit
cards, capital leases and notes payable to suppliers. By using ARC loans to
pay down debt, companies can use their cash flow to invest in and strengthen
their businesses.
Loan Details
ARC loans are offered by some commercial lenders who are SBA participants
and, if approved, the loans are interest free to the borrower. The loans
have a $35,000 maximum limit, and loan proceeds are disbursed to recipients
over a six-month period.
Businesses that participate in this program are able to defer repaying the
ARC loan principal for 12 months after they receive the last disbursement of
the proceeds. Repayment can extend up to five years.
Who Is Eligible?
Your business may qualify for an ARC loan if it:
- Is an established small business that has been in operation for a
minimum of two years
- Has financial statements that show it was profitable in one of the past
two years
- Can project sufficient cash flow to meet current and future loan
payments over a two-year period from loan approval
The SBA says that businesses that have severely delinquent loans or whose
past performance or future cash flow indicate a slim chance of survival are
unlikely to be approved for ARC loans.
If you think your business might benefit from applying for this SBA program,
you should contact an SBA-approved commercial lender. The program will
operate until September 30, 2010, or until the funds appropriated to the
program run out, whichever comes first.
Contact us with questions.
Work-In-Process is provided by
Somerset for our clients and other interested persons upon request.
Since technical information is presented in generalized fashion, no
final conclusion on these topics should be made without further review.
For additional information on the issues discussed,
please contact
Ken
Hedlund,
Jay Feller,
Steve George,
Chris
Mayfield or
Rebecca Ogle
of our
Construction & A/E Team.
This document is not intended or written to be used, and cannot be used,
for the purpose of avoiding tax penalties that may be imposed on the
taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.IndianaConstructionCPAs.com
info@somersetcpas.com
