QUESTION: I have heard the government is finally providing some funds to assist struggling small business owners. Can you provide any details?

Trevor L., Estero

Score Naples Answered

According to the Small Business Administration (SBA), the Government is determined to make a big dent in the small business credit crunch. The goal for SBA is to jump-start job creation, restart lending, and promote investment in small businesses.

The American Recovery and Reinvestment Act provides the SBA with $375 million to temporarily eliminate loan fees and raise guarantee limits to 90 percent on most types of 7 (a) loans, the most basic and most used type of SBA’s business loan programs.

It also temporarily eliminates 504 loan fees for both borrowers and lenders. The 504 loan program provides growing businesses with long-term, fixed rate financing for major fixed assets, such as land and buildings. The SBA estimates these provisions will apply to approximately $8.7 billion in 7 (a) loans and $3.6 billion in 504 loans through calendar year 2009. Reference the SBA’s web site www.sba.gov/recovery/index.html for more detailed information.

Significant interest has been shown in a new program funded by the Act; tentatively called America’s Recovery Capital or “ARC” Stabilization Loans. The ARC loan program is designed to give viable small businesses, suffering immediate financial hardship, some temporary financial relief so they can keep the doors open and get their cash flow back on track. Once in place, this temporary program, funded to $255 million, will offer deferred-payment loans, 100% guaranteed by SBA, for up to $35,000 to small businesses that need help making payments on existing, qualifying, non-SBA backed loans.

There are no interest charges to the borrower and the SBA will pay the monthly interest at the rate of Prime plus 2% to the lender on behalf of the borrower. There is a disbursement period of up to 6 months followed by 12 months with no repayment of the ARC loan principal. After the 12-month deferral period, the borrower pays back only the ARC loan principal over a period of five years.

ARC loans will be available beginning June 15, 2009, through SBA-approved lenders, as long as funding is available or until September 30, 2010, whichever comes first. The only eligible purpose for use of the ARC loan proceeds is to make periodic payments of principal and interest on qualifying small business loans including:

• Secured & unsecured conventional loans (mortgages, term and revolving lines of credit)
• Capital leases
• Notes payable to vendors/suppliers/utilities
• Development Company Loan Program (504) first mortgage loans
• Credit card obligations for business purposes
• ARC loans can’t be used to make payments on another SBA-guaranteed loan, with the exception of loans made after February 17, 2009.

For more information on the ARC loan program including eligibility and how to apply, log on to www.sba.gov/recovery/arcloanprogram/index.html or contact the volunteer business professionals at the Naples Chapter of SCORE, Counselors to America’s Small Business. Counseling is provided FREE of charge to all US citizens and legal aliens. Call 239-430-0081 or visit our web site www.scorenaples.org and click on “request counseling now as a first time client.” The Naples SCORE business office is located at 900 Goodlette Road North, in the Fifth Third branch bank building. Office hours are 9:00 AM to Noon, Monday through Friday.

Naples SCORE presents monthly workshops on a variety of topics including:

• How to write a business plan
• Starting a business in Collier County
• Financing your business
• Marketing your business

To register go to www.scorenaples.org and click on “workshop" registration” or call

239-430-0081.

If you would like an answer to your question, please fill out the form located at our web site a counselor will contact you within 48 hours. Please include your name, email address and a contact phone number.

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