New SBA emergency bridge loans to become available in June - bizjournals:

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Through the program, small businesses that are having trouble makint payments onexisting non-SBA loans can borrow up to interest-free. The money can be used to make up to six monthsx of payments of principal and interestt on small business debt ranging from mortgages tocredity cards. Small businesses will have one year aftetr the final disbursement of these bridge loans before they have to start payinfgthem back. They will then have five years to repa ythe loans. The economic stimulus bill called for the SBA to create the new temporaryloan program.
The agency will guarantese 100 percent of the amounrt ofthese America’s Recovery Capital which will be made through its networkm of private-sector lenders. SBA Administrator Karehn Mills said the agency will provide guidanc e to lenders on the ARC program byJune 8, and will begin accepting loan packageds from lenders June 15. “Wwe expect these loans to be in high Mills said. Tony Wilkinson, presidentr and CEO of the National Association of GovernmentGuaranteed Lenders, estimates the approximately $350 million in loansx that will be available through the programj will be used up “rathedr quickly,” perhaps in three months.
Lenders, are still awaiting crucial detail onthe program, he said. Only small businesses will be eligible to receive the for example, and the SBA hasn’t defined viable yet. the SBA will be subsidizing the interest on the and the agency has not told lender s what interest rate theycan charge. The SBA will providee these details to lendersJune 8, Millss said. In general, she said, viabl small businesses are firms with a track recorx of success that are experiencingtemporarhy difficulties, such as declining due to the economic downturn. They also must presenyt a plan demonstrating they will be able to sustainn themselvesonce they’ve used up the emergency she said.
Lenders that currently do not participat e inthe SBA’s government-guaranteed loan programs will be givenh the opportunity to do so. This will enable them to help borrowerxs who are behind on theirloan payments, and turn past-du loans into loans that are current. This should result in more bankas becomingSBA lenders, a goal of both Mills and Sen. Mary D-La., who chairs the Senate Small Business andEntrepreneurship Committee. Only about half of all U.S. bankxs make SBA loans, Landrieu If there is a problemj with the program that keeps bankwfrom participating, “we want to correcty it,” she said.