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SBA Stimulus Program to Help Builders, Suppliers Pay Their Bills
A new, short-term program offered by the Small Business Administration (SBA) may provide some temporary relief to thousands of small businesses — including home builders and suppliers — by offering interest-free loans to help them pay their bills.
The America’s Recovery Capital (ARC) loan program, which began on June 15, offers small businesses guaranteed deferred-payment, interest-free loans of up to $35,000 that they can use to pay principal and interest on existing loans; qualifying small business debt, including mortgages; term and revolving lines of credit; capital leases; credit card obligations; and notes payable to vendors, suppliers and utilities.
The SBA $255 million program will continue through Sept. 30, 2010 or until the funding is exhausted.
SBA-approved lenders, who are being encouraged to make the loans, will disburse each loan over a six-month period. Borrowers will not be required to begin repaying the loans until 12 months after final disbursement and will have five years to repay the loan.
While the loans are available interest-free to small businesses, SBA will pay the lenders the prime rate plus 2% for the loans.
SBA classifies companies as small businesses based on their annual revenue thresholds or their number of employees. Home builders are considered a small business if their annual revenues do not exceed $37.5 million, while the annual revenues of contractors are capped at $14 million. Manufacturers, such as those who make components used in home construction, are limited to 500 or fewer employees, while wholesalers may employ up to 100 persons.
NAHB members can begin the loan process by first contacting local banks. Because the program is new, many lenders may not be aware of it.
For more information, including frequently asked questions, visit www.sba.gov/recovery/arcloanprogram.
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