Keyword: Small business plans
Only about 7,000 companies nationwide will qualify. Is your company one of them?
When the Small Business Administration pitches its $35,000 loan later this month to firms seeking “temporary financial relief to keep their doors open,” it may be the salvation of small companies seeking short-term survival cash.
But experts said $35,000 isn’t much money, especially in a high-cost place like New Jersey, New York and California, and these loans are likely to be limited to companies that might survive the recession.
For many regions, these small loans seem geared to the small mom-and-pop or professional-services businesses. It’s another brick in the wall to build back the economy, but it is not the answer for everyone.
The $255 million for this loan program is dubbed America’s Recovery Capital. While most SBA loans now carry a 90 percent federal repayment guarantee, ARC loans will be 100 percent guaranteed — and the borrower makes no payment for the first 12 months.
Small-business owners who think they might qualify for ARC should start talking with a lender now, as SBA will roll out the program this month.
ARC loans can be used to make the payments on an existing loan for up to six months, but the money can’t be used to make payments on another SBA loan taken out before Feb. 17, when President Barack Obama signed the American Recovery and Reinvestment Act.
As with any loan request, go in prepared. One banker reported meeting with a company looking for $175,000. When they were turned down, they came back, asking for $35,000 in ARC loans. "Now, honestly," said the banker, "if they really need $175,000, what good will $35,000 do? It will only prolong their agony." They got turned down for the $35,000 ARC loan as well.
Define how you will use that $35,000 to GROW your company, not just sustain it. Bankers have built in radar for "growth" and "stability". That is what they want to hear about. Use some of the money for existing loans if you need to, but also use some of it to grow your business.
And don't try to just talk it through. Present a real business plan. This is real money that you are asking for. There is a lot of competition for it. If you want it, demonstrate your sincerity in a solid business plan.
Good luck.
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