ARC loans to provide stimulus boost to smaller U.S. businesses
Small businesses in Cape Coral and throughout the nation could be eligible for interest-free loans of up to $35,000 to pay for existing debts as part of a program run by the U.S. Small Business Administration with funds from the economic stimulus package.
About 200 small business owners and representatives took part in a town hall meeting in the Cape Coral City Council chambers Tuesday to hear how the loan program will be implemented.
SBA marketing executive Nancy Rackear said the loans will be issued by selected banks, but guaranteed by the SBA.
“We do this in part to make it easier for the banks to say, ‘Yes,'” she said.
To qualify for the loans, known as America’s Recovery Capital loans, a business must be an existing enterprise — it is not for start-ups — and show that it was profitable at some point in the last three years.
Loans are limited to one per business, and money received from the loan must be used to pay off qualifying debt, including: mortgages, term and revolving lines of credit, capital leases, credit card debt and notes payable to vendors, suppliers and utilities.
Borrowers must be current or behind 60 days or less on their debt payments to qualify.
ARC loans carry no interest or SBA fees, and disbursements are issued over the course of six months. Borrowers are not obligated to start paying back the loan until 12 months after the last payment, and must pay back the full amount in five years.
Rackear cautioned that the ARC loans are designed to get struggling businesses through hard times and are not grants.
“It’s not a public assistance program. It’s still a loan that you took out and you’re responsible for,” she said.
The ARC loans will be available June 15.
Pat Kirkpatrick, vice president of Regions Bank, urged entrepreneurs to sign up early for ARC loans.
“Get it lined up ahead of time because the amount of funds that seem like they are going to be available aren’t going to last long,” he said.
The town hall meeting was one of three held throughout Southwest Florida to raise awareness of the ARC loans, with similar meetings held at Florida Gulf Coast University on Monday and in Naples Tuesday morning.
Local elected officials expressed empathy with small business owners trying to make it in a turbulent economic period.
“I understand what it’s like to look someone in the eye and say we can no longer afford to keep your services,” state Rep. Gary Aubuchon, R-Cape Coral said, adding that his company, Aubuchon Homes, recently contracted from about 100 employees to about 60.
Cape Coral Mayor Jim Burch said his small business was saved by a second loan, and he went on to make it a lucrative enterprise before selling it.
“Had someone not taken that chance I would’ve been out of business, and I don’t know where I would be today,” he said.