New SBA Micro Loans for Struggling Businesses
On June 15, the SBA began it’s new micro loan program, appropriately titled “America’s Recovery Capital Loan Program.” The program was created to help small business owners pay existing debts and make meeting payroll easier.
Borrowers can get SBA guaranteed loans of up to $35,000 which can be applied to meeting short term debt obligations like mortgages, credit card payments, supplier bills, and so on. The loans have 0% interest, no fees, and can be amortized over a maximum of 5 years.
You might be wondering, what’s the catch? Well, for borrowers there is no catch. Lenders earn money off the interest free loans because the SBA directly pays them prime+2%. If the borrower would happen to default, the SBA guarantee kicks in and they pick up the rest of what’s due to the bank.
Unfortunately, start up business do not qualify for the ARC Program–it’s strictly reserved for existing businesses.