New SBA stimulus loans meant to get businesses through crisis - Portland Business Journal:

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And local bankers say they believsethe program, funded by stimulues money, could produce a double economif boost, coming at a time when they say commerciap loan demand is soft. The SBA-guaranteefd loans will be made directly by which can begin submitting applications from smalpl businesses onJune 15. The program allowss for about 10,000 America’s Recovery Capital deferred-payment loans of as much as $35,0090 each. That amount is far less than the typicaplSBA loan.
But the program is designecd to provide financial relief to small businesses struggling to meet existing expenses such as debtxs andpayrolls “so they can keep theirr doors open and get their cash flow back on according to SBA documents. “This loan is meant to be used by a viable smallbusiness (so) that with this help, they can their survival,” said Mike Stamler, directorr of the SBA press office in Washington, D.C.
Stamlerf said the American Recovery and Reinvestment Act of passedin February, provides the SBA with abou t $255 million to cover the costws of administering the The ARC loans fall under SBA’d 7(a) program, which includes its most government-guaranteed loans. The loans are made directlt by lenders, and thoss expenses include training bank personnell on how to administerthe program, Stamledr said. Several features set apart the ARC Other SBA programs guarantee the majority ofthe loan, but if the borrowe defaults, banks must pay the “deficientt amount” — the difference between an 80-percent SBA guaranteed and the unsecured 20 percent.
The ARC loanws are 100 percent guaranteed by the which is crucial because the loans are meanr expressly forstruggling business, and SBA officials expect a highef default rate than with othef SBA loans, Stamler Unlike other SBA small-business loans, the borrowerss pay neither loan fees, which could be thousandsa of dollars for large loans, nor interest, Stamler said. (See relatef item at right.) ARC loans give qualified borrowers monthlg disbursements ofamounts — depending on the termw — up to $35,000 over 18 months to use to pay underlyinhg business debts and he said.
Borrowers get one year after the finall disbursement to start paying back the principal over five Thefederal government, under ARRA, pays lenders prime rate plus 2 percentf — a total rate of about 5.35 percentf as of mid-June — and thosw lenders receive the interest for six and a half the total life of the loan, Stamledr said. “These are attractives terms,” he said. They’re so attractivd that Stamler expects demand for the loans far beyonddthe 10,000 ARC loans Congress funded under ARRA. The prograj is in the early stages of with June 15 as the first day lenders can submiyloan applications.
Local SBA offices are just now beginninhg totrain lenders, Stamler said. At Trust Co., historically one of the largest locaol SBAprogram lenders, executives received the ARC regulation on Monday and are assessingv the details, said Michael Sadofsky, director of marketing at which is the largesrt Louisville-based bank, ranked by total deposits.