New Program Offers Interest-Free Loans - KWWL - Eastern Iowa Breaking News, Weather, Closings

New Program Offers Interest-Free Loans

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WASHINGTON (KWWL)

Some of Iowa's small businesses, burdened by nagging debt, may find themselves eligible for interest-free loans, thanks to the American Recovery and Reinvestment Act. 

Iowa Second District Congresman, Dave Loebsack, announced the new America Recovery Capital (ARC) program, which begins June 15.  the new program allows small businesses to get loans of up to $35,000, to pay down existing business debts.  Borrowers pay no interest on the ARC loans and repayment does not begin for one year.  In a press release, Congressman Loebsack talked about the new ARC program.  

"In the wake of last summer's floods and the economic downturn, Iowa small businesses need our continued support," said Congressman Loebsack. "One of the best ways to help our small businesses is to provide access to capital. The ARC program provides small business owners with extra breathing room so that they can pay operating expenses, make payroll, retain employees, and continue their work as job creators in our economic recovery."

According to a 2008 Small Business Administration report, in 2006 Iowa had 259,671 small businesses that made up 97% of the state's employers.  They created 62% of the state's net new jobs from 2004 to 2005.

To qualify for the ARC loans, small firms must demonstrate they are experiencing immediate financial hardship due to the economic downturn, but are otherwise deemed by the Small Business Administration (SBA) to be viable.  The loans will be made by commercial lenders and can be used for payments of principal and interest for existing, qualifying small business debts like credit card obligations, mortgages, lines of credit, and balances due to suppliers, vendors, and utilities. 

To apply for ARC loans, businesses should visit their local SBA-approved small business lenders.  The loans will be available through September 30, 2010, or until appropriated funding runs out.  Additional information about the ARC loan program is available at http://www.sba.gov/recovery/arcloanprogram/index.html.   

In addition to the ARC loan program, the tax American Recovery and Reinvestment Act contained other measures aimed at helping small firms access credit.  For instance, it increases the percentage of a loan that the SBA can guarantee, makes SBA-backed loans more affordable and provides tools to unfreeze the small business credit markets, helping small companies access capital at affordable rates.

Online Reporter:  Ron Steele

rsteele@kwwl.com

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