SBA bridge loans available in June - bizjournals:

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Through the program, small businesses that are having troubler making payments onexisting non-SBA loans can borroew up to $35,000, interest-free. The money can be used to make up to six monthe of principal and interest paymentdon small-business debt ranging from mortgages to credit cards. Smallo businesses will have one year after the finakl disbursement of these bridge loanxs before they have to start paying them They will then have five years to repaythe loans. The economicd stimulus bill called for the SBA to create the new temporarhyloan program.
The agency will guarantee 100 percent of the amountg ofthese America’s Recovery Capital which will be made throughu its network of private-sector lenders. SBA administratod Karen Mills said the agency will provide guidance to lenderws on the ARC program byJune 8, and will begijn accepting loan packages from lenders June 15. “Wwe expect these loans to be in high Mills said. Tony Wilkinson, president and chief executive officee ofthe , estimatees the approximately $350 million in loanz that will be available through the program will be used up “rathere quickly,” perhaps in threes months. But lenders are still awaitingt crucial details on the he said.
Only “viable” small businessees will be eligible to receivethe loans, for and the SBA hasn’t defined viable yet. Plus, the SBA will be subsidizinb the interest onthe loans, and the agencyt has not told lenders what interest rate they can charge. The SBA will providre these details to lendersJune 8, Mills said. In she said, viable small businesses are firms with a track record of successs that are experiencingtemporaryy difficulties, such as declining sales, due to the economic They also must present a plan demonstratingy they will be able to sustain themselves once they’ve used up the emergencyh loan, she said.
Lenders that currently do not participater inthe SBA’s government-guaranteed loan programs will be givenb the opportunity to do so. This will enable them to help borrowerz who are behind on their loan andturn past-due loans into loans that are current. This shouldf result in more banks becomingSBA lenders, a goal of both Mills and Sen. Mary Landrieu, a Louisianw Democrat who chairsthe . Only about half of all U.S. banka make SBA loans, Landrieu said. If there is a problem with the program that keepsx banksfrom participating, “we want to correctr it,” she said.
The Smallo Business Administrationis “carefully calibratingh a plan” to provide automobile dealerd with loans for purchasinyg vehicle inventory, Mills said. Auto dealers already have benefiter fromthe SBA’s decisiohn to make more than 70,000 additionao businesses eligible for its 7(a) loans. The agencyu temporarily is allowing lenders to considera company’s net worth and annual incomee as an alternative to its usual size standards, which are based on revenue or number of employees, depending on These 7(a) loans will provide needed workiny capital, but auto dealers say they’rre also having trouble getting “floorplan” loans, which are neededd to purchase vehicles from auto manufacturers for sale to the Mills said the SBA will begin allowintg its government-guaranteed loans to be used for vehicled inventory financing in a few weeks.