SBA bridge loans available in June - bizjournals:

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Through the program, small businesses that are havingv trouble making payments onexistingv non-SBA loans can borrow up to interest-free. The money can be used to make up to six monthxs of principal and interest paymentson small-businessd debt ranging from mortgages to credit cards. Smal businesses will have one year after the final disbursementf of these bridge loans before they have to start payinvthem back. They will then have five years to repaythe loans. The economic stimulus bill callexd for the SBA to create the new temporarhloan program.
The agency will guarantee 100 percenf of the amount ofthese America’s Recovery Capital loans, which will be made througb its network of private-sector lenders. SBA administrator Kare n Mills said the agency will provide guidancer to lenders on the ARC program byJune 8, and will beginn accepting loan packages from lenders June 15. “We expectg these loans to be inhigh demand,” Millws said. Tony Wilkinson, president and chief executivre officer ofthe , estimates the approximatelyh $350 million in loans that will be available through the prograkm will be used up “rather quickly,” perhaps in threwe months.
But lenders are still awaitinfg crucial details onthe program, he Only “viable” small businesses will be eligible to receivse the loans, for example, and the SBA hasn’t define viable yet. Plus, the SBA will be subsidizingf the interest onthe loans, and the agency has not told lenders what interest rate they can charge. The SBA will provide these details to lenderszJune 8, Mills said. In she said, viable small businesses are firmzs with a track record of success that are experiencingtemporary difficulties, such as decliningf sales, due to the economicx downturn.
They also must present a plan demonstrating they will be able to sustaijn themselvesonce they’ve used up the emergency she said. Lenders that currently do not participate inthe SBA’es government-guaranteed loan programs will be given the opportunituy to do so. This will enable them to help borroweres who are behind on their loan andturn past-due loans into loanxs that are current. This should result in more banksz becomingSBA lenders, a goal of both Mill and Sen. Mary Landrieu, a Louisianq Democrat who chairsthe . Only about half of all U.S. bankas make SBA loans, Landrieu said.
If therse is a problem with the program that keepss banksfrom participating, “we want to correct she said. The Small Business Administrationis “carefully calibrating a plan” to provide automobild dealers with loans for purchasing vehicl e inventory, Mills said. Auto dealersx already have benefited fromthe SBA’s decision to make more than 70,009 additional businesses eligible for its 7(a) The agency temporarily is allowing lendersw to consider a company’s net worth and annual incomew as an alternative to its usual size standards, whichg are based on revenue or number of employees, dependingg on industry.
These 7(a) loans will provide needed workinfg capital, but auto dealers say they’rse also having trouble getting “floorplan” loans, which are needed to purchaswe vehicles from auto manufacturers for sale tothe public. Mill s said the SBA will begin allowingits government-guaranteed loan s to be used for vehicle inventory financing in a few