Interest-free SBA Loans

The Small Business Administration has begun offering interest-free loans of up to $35,000 to small businesses through SBA-approved lenders. The loans are made under the America’s Recovery Capital Loan Program ("ARC"), and can be used to make payments on one or more existing, qualifying small business loans for up to six months. ARC loans carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to SBA. Eligibility information from the SBA website includes the following:

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 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)

For more information on the program, please visit the SBA website.