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The good news about ARC loans is that it provides another additional source for small business owners to free up more funds to reinvest in their enterprises. It gives them an opportunity to get their businesses on firm footing by buying them time and money needed to restructure their business plans.
It is important for small businesses to understand that this is not a grant. It is not FREE money. It has to be paid back. “There is no catch but there is a requirement they pay the loan back,”sates Ruben R. Garcia, the San Diego district director of the SBA. “I don’t want people to think it’s a gift. It’s not. It isn’t a grant. It’s a loan. It is not free money. It’s an opportunity to defer payments and give businesses a chance to get back on their feet before making a payment.”
One of the disadvantages of the new ARC loans are the specific qualifying factors for small business owners who may meet the criteria for receiving ARC funding. For instance, applicants must own for-profit businesses only and must have been in business for at least two years. In addition, applicants must be current on existing loan payments, and must have an acceptable business credit score. Even worse, like most loans - collateral may be required. Also, the money provided through an ARC loan must only be used to make the payments on an existing, qualifying small business loan.
Another disadvantage is finding a lending institution that is a SBA lender who can process your loan. If your lending institution is not currently a SBA lender, they would need to complete training by the SBA in order to process ARC loans. Since the ARC loan program is still relatively new, it appears that very few lenders have signed up to participate in the program.
Still another disadvantage is the time and paperwork involved in applying for an ARC loan. An applicant must meet the defining criteria for “financial hardship.” For example, they must be able to prove that their sales and reveune have declined, that they are experiencing difficulty in: paying off existing debt, meeting payroll demands, purchasing necessary materials and supplies, and/or paying to lease office or warehouse space.
Finally, with limited loans available, the competition is keen making the loans scarcer and more difficult to obtain. |
