Do your homework before applying for federal business loan
The federal government continues to free up millions of dollars for small business. But businesses that want to take advantage of the bounty need to do their homework and come prepared when they apply for a federal loan.
The government’s SBA program introduced the America’s Recovery Capital, or ARC, loan designed to give small businesses suffering financial hardship temporary relief.
ARC loans are a deferred payment loan of up to $35,000 that can be used for principal and interest payments on existing, qualifying debt or loans. They are 100 percent guaranteed and there are no interest charges to the borrower. SBA will pay the current prime rate (3.25 percent) plus 2 percent to the lender on behalf of the borrower.
Under the ARC loan, the borrower has 18 months to make the first payment and pays back only the principal over five years.
SBA even has tailored a loan to help the beleaguered auto industry. Starting July 1, loans for between $500,000 and $2 million will be offered to finance inventory for eligible auto dealers. The program also is available to RV and boat dealers.
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