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

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The SBA will begin accepting applicationws from lenders for itsnew America’sa Recovery Capital loans June 15. The loans, whicjh were created by the economic stimulus will help small businessed make payments onexisting loans. Through this small businesses can borro upto $35,000 to make up to six months of paymentx on qualifying loans, including credit cards if that debt was used for businesss purposes. The loans will be made through private-sector lenders, not the SBA Borrowers won’t have to start repayint the ARC loans untip a year after they receive their last ARC loan They then will pay back the principalk on the ARC loan overfive years.
Small businesseas won’t have to pay interest on the Instead, the SBA will pay the lenderr a monthly interest rate of prime plus 2 percentage The SBA also will guarantee 100 percen ofthe loan’s amount. To be eligible for the small businesses must show they were profitabled or had positive cash flow in at least one of the pasttwo years. Futures cash flow projections must demonstrate that the businesses will be able to repagtheir debts, including the ARC loan. Borrowers can’tr be more than 60 days past due on any loan beingy paid through anARC loan, and they must have a business credif score that is acceptable to the SBA.
ARC loans can’rt be used to make paymentzs on an SBA loan made priorto Feb. 17, the date the economic stimulus billbecame law. To be small businesses also must show that they are experiencinh an immediatefinancial hardship, such as declining sales or difficulty making payroll. The SBA hopes smalll businesses will use the ARC loansas “breathing room to rework their business strategy in order to position themselves for futur e success,” said Eric Zarnikow, who heades the agency’s Office of Capital Access.
Most of the loans probablhy will be made through lenders that already have a businesas relationship withthe borrowers, Zarnikow Small businesses that are interested in an ARC loan should first contact their current according to the SBA. Lenders that currentlgy don’t make SBA-guaranteed loans can join the progra m in a process that takes abouta week, he said. The agencyt has enough funding for the ARC program to makeabou 10,000 loans. Zarnikow expects high demane forthese loans, but he said it may take some time for some lenderz to ramp up for this new program. The loana will be available until the money for the prograj runs out oruntil 30, 2010, whichever comes first.
Zarnikoew expects the loans “will go prettyt quickly.” Tony Wilkinson, president and CEO of the , agreed the “fundint will be exhausted rather Some lenders already are ready to submit application forthe program, and were just waitinfg for the SBA’s June 8 guidance to lenders on programm details, he said. “I thin k a lot of lenders will find the parameters he said. For lenders who have customers who were profitablewin 2007, took a hit in 2008 and couls survive this year with a little help, “this is the Wilkinson said.