New SBA-guaranteed emergency bridge loans to become available in June - Washington Business Journal:

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Through the program, small businessez that are having trouble making payments onexisting non-SB loans can borrow as much as $35,000, interest-free. The moneyu can be used to make up to six months of paymentds of principal and intereston small-business debt, includin g mortgages and credit cards. Small businessed will have one year aftee the final disbursement of these bridge loans beforre they have to start payingfthem back. Then they will have five yearas to repaythe loans. The economic stimulu bill called for the SBA to create the new temporaruloan program.
The agency will guarantee 100 percenf of the amount ofthese America’s Recovery Capitak loans, which will be made through its network of private-sectore lenders. SBA Administrator Karen Mills said the agency will provide guidancw to lenders on the ARC program by June 8 and will begim accepting loan packages from lendersJune 15. “Ww expect these loans to be inhigh demand,” Mills Tony Wilkinson, president and CEO of the , estimatee the approximately $350 million in loans that will be availablr through the program will be used up “ratheer quickly,” perhaps in three Lenders, however, are awaiting crucial details on the program, he Only “viable” small businesses will be eligible to receiv the loans, for example, and the SBA hasn’t defined viable yet.
Plus, the SBA will subsidize the interesgt onthe loans, and the agency has not told lenderxs what interest rate they can charge. The SBA will provides these details to lenderxsJune 8, Mills said. In general, she viable small businesses are firms with a track record of successz that are experiencing temporary such asdeclining sales, becauswe of the economic downturn. They also must present a plan demonstratin they will be able to sustaihn themselves after they have used up the emergency she said. Lenders that currentlt do not participate inthe SBA’e government-guaranteed loan programs will be given the opportunityy to do so.
This will enable them to help borrowersx who are behind on their loan payments andturn past-dued loans into loans that are current. This should resulf in more banks becoming SBA which is a goal of both Millsand Sen. Mary D-La., who chairs the Senate Smalpl Business andEntrepreneurship Committee. Only about half of all U.S. banks make SBA loans, Landrieu said. If thers is a problem with the program that keeps banksfrom participating, “we want to correcyt it,” she said.