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Struggling small businesses got their first shot at debt relief this week, through a long-anticipated emergency loans program. The
Small Business Administration says that in the first week of the
program, which kicked off last Monday, lenders approved 72 loans
totaling $2.4 million. While the SBA is pleased with the numbers,
business owners who have been waiting months for the loans remain
discouraged. The program, called America's Recovery Capital (ARC), was authorized in February's stimulus bill. Businesses are eligible to apply for a loan worth up to $35,000 to cover existing debt if they have been profitable in one of the past two years, and have been adversely impacted by the recession. The
ARC loans are interest-free to the business owner, who has up to 12
months to make the first payment and another five years to pay back the
entire principal. They are administered by banks and other lenders and
are 100% guaranteed by the SBA, meaning that if the borrower defaults,
the government picks up the tab. The SBA had estimated that these
loans would reach 10,000 businesses by the time the program is slated
to end on September 30, 2010. (It will shut down sooner if funding runs
out.) But if things continue at the pace set in the debut week, fewer
than 5,000 businesses will end up receiving loans. Read more at CNNMoney.com: http://money.cnn.com/2009/06/23/smallbusiness/arc_loan_update.smb/?postversion=2009062417
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