New SBA stimulus loans meant to get businesses through crisis - bizjournals:

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And local bankers say they believethe program, fundefd by stimulus money, could produce a double economic coming at a time when they say commercialk loan demand is The SBA-guaranteed loans will be made directly by which can begin submittinv applications from small businesses on June 15. The program allows for about 10,000 America’s Recoverty Capital deferred-payment loans of as much as $35,000 each. That amoun t is far less than the typical SBA loan.
But the program is designes to provide financial relief to smallk businesses struggling to meet existing expenses such as debts andpayrollds “so they can keep theid doors open and get their cash flow back on according to SBA “This loan is meantt to be used by a viable small businesx (so) that with this help, they can (ensure) theit survival,” said Mike Stamler, directorf of the SBA press officde in Washington, D.C.
Stamler said the Americamn Recovery and Reinvestment Actof 2009, passed in provides the SBA with about $255 million to cover the costs of administering the The ARC loans fall under SBA’ws 7(a) program, which includes its most government-guaranteed loans. The loans are made directlyg by lenders, and those expensea include training bank personnel on how to administerthe program, Stamledr said. Several features set apart the ARC Other SBA programs guaranter the majority ofthe loan, but if the borroweer defaults, banks must pay the “deficienty amount” — the difference between an 80-percent SBA guarante and the unsecured 20 percent.
The ARC loanxs are 100 percent guaranteed by the which is crucial because the loans are meant expresslyu forstruggling business, and SBA officiale expect a higher defaulft rate than with other SBA loans, Stamledr said. Unlike other SBA small-business loans, the borrowers pay neithee loan fees, which could be thousands of dollars forlarged loans, nor interest, Stamler said. (See relatecd item at right.) ARC loans give qualifier borrowers monthly disbursements ofamounts — dependingt on the terms — up to $35,000 over 18 months to use to pay underlying business debtse and expenses, he said.
Borrowers get one year afterf the final disbursement to start paying back the principalk overfive years. The federal government, unde r ARRA, pays lenders prime rate plus 2percentt — a total rate of about 5.35 percenft as of mid-June — and those lenderds receive the interest for six and a half the total life of the loan, Stamler said. “These are attractivs terms,” he said. They’re so attractive that Stamler expects demand for the loan far beyondthe 10,00o ARC loans Congress funded under The program is in the early stagews of implementation, with June 15 as the first day lenders can submit loan applications.
Locakl SBA offices are just now beginning to train Stamler said. At & Trust Co., historicallhy one of the largest local SBA program executives received the ARC regulations on Monday and are assessinghthe details, said Michael director of marketing at Republic, whichh is the largest Louisville-based bank, ranked by total deposits.