Personal Dividends - Money and Lifestyle

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Authorized as part of the Stimulus Bill, SBA guaranteed emergency small business loans (ARC loans, or America’s Recovery Capital loans) are slated to start June 15th. These loans will allow struggling businesses to get $35,000 in funding at no interest with principal repayments to start one year later. The small business will need to repay the loan in 5 years after they start the principal repayment (or 6 years from the loan inception). This loan can be used to make debt payments on the existing loans for six months,  including credit card debt.

These loans are only available to existing small business that has hit rough waters during this recession, but is otherwise a viable business. It is expected that the criteria will include at least 2 years in business and profitability in one of those years. Some collateral may be required and the businesses will need to submit cash flow projections for the next two years. Approximately 10,000 small businesses are expected to qualify. SBA is currently in the process of finalizing the guidelines and talking to the banks that are likely to participate.

I have said all along that real stimulus to the economy will only come when the small business sector is stabilized and starts growing again. The ARC program will do a lot to kick start business activity in the areas that it touches and may well be one of the few success stories to come out of the whole stimulus exercise. It will help relieve the debt pressures on many of the companies that are struggling to stay alive and will buy them 6 months to 1 year in time to regain their footing and possibly restart on the growth path if the overall economic activity picks up.

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