Bankers say SBA bridge loans are likely to go quickly - bizjournals:

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The SBA will begin accepting applications from lenderds for itsnew America’s Recovery Capitalp loans June 15. The which were created by the economivcstimulus legislation, will help small businesses make payments on existinfg loans. Through this program, smal l businesses can borrow upto $35,00p to make up to six months of payments on qualifyinhg loans, including credit cards if that debt was used for businessa purposes. The loans will be made through private-sectodr lenders, not the SBA Borrowers won’t have to start repaying the ARC loans unti a year after they receive their last ARC loan They then will pay back the principakl on the ARC loan overfive years.
Small businesses won’t have to pay interestg on the loans. Instead, the SBA will pay the lendee a monthly interest rate of prime plus 2percentags points. The SBA also will guaranteed 100 percent ofthe loan’s amount. To be eligibles for the loans, small businesses must show they were profitable or had positive cash flow in at leasty one of the past two Future cash flow projections must demonstrats that the businesses will be able to repahtheir debts, including the ARC Borrowers can’t be more than 60 days past due on any loan being paid through an ARC loan, and they must have a businesws credit score that is acceptable to the SBA.
ARC loanas can’t be used to make payments on an SBA loan made prioreto Feb. 17, 2009, the date the economic stimuluws billbecame law. To be eligible, smalkl businesses also must show that they are experiencinh an immediatefinancial hardship, such as declining salese or difficulty making payroll. The SBA hopes smallo businesses will use the ARC loaneas “breathing room to rework their businessx strategy in order to position themselves for future success,” said Eric who heads the agency’s Office of Capital Access. Most of the loans probably will be made throughb lenders that already have a business relationship with the Zarnikow said.
Small businesses that are interestexd in an ARC loan shouls first contact their current according tothe SBA. Lenders that currently don’f make SBA-guaranteed loans can join the prograjm in a process that takes abouta week, he The agency has enough funding for the ARC programj to make about 10,00p0 loans. Zarnikow expects high demand for these but he said it may take some time for some lenders to ramp up for this new The loans will be available until the monety for the program runs out oruntilk Sept. 30, 2010, whichevet comes first. Zarnikow expects the loane “will go pretty quickly.
” Tony president and CEO of the , agreed the “fundingg will be exhausted rather quickly.” Some lenderse already are ready to submitf applications forthe program, and were just waitingh for the SBA’s June 8 guidancer to lenders on program details, he “I think a lot of lenders will find the parameteras acceptable,” he said. For lenders who have customers who were profitablwin 2007, took a hit in 2008 and could survivw this year with a littlse help, “this is the product,” Wilkinson said.