posted by Jeff Novak: Thursday, June 11, 2009
According to CNN.com, on Monday June 15th, the ARC (America's Recovery Capital) Loan Program that was part of the February Stimulus Bill is starting. Small Businesses can begin applying for interest-free debt-relief loan the the SBA (of up to $35,000). The loans are not as simple as asking your local bank for a loan and getting cash. In fact, it is going to be quite difficult to even qualify for the loan, some of the requirements- Business must be open for at least 2 years and profitable in at least one of the two and show they are experiencing financial hardship- sales decreasing by at least 20% over the last year, frozen credit lines, business costs increasing by at least 20% or difficulty meeting payroll, rent or making loan payments. There are other requirements, but this may rule out many small businesses already.
Another difficulty is finding banks that are willing to make the loan. The loan is interest-free for the borrower, the lender gets paid prime plus 2% (would pay 5.25% currently). Additionally, some banks are requiring prospective borrowers to be existing bank customers or to run credi scoring on the business. Lastly, Lenders can only make 50 ARC loans a week and only $225 million is available.
If your small business is struggling for cash flow and does not qualify or is turned down for the ARC loan, factoring may be an option. Unlike the strict requirements of the ARC loan, to qualify for factoring, you only need to have receivables from another business. Anchor Funding Services then runs a credit check on your customers and establish a credit limit. Anchor then buys your invoices and pays 80% to you that day. Anchor Funding Services then collects the invoice and pays you the difference (minus our fees).
If your business has been turned down or does not qualify for an ARC loan, visit our website or call one of our knowledgable business development officers at 866-950-6669 or fill out a quick quote.
Labels: anchor funding services, arc loan, factoring, sba loan
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