SBA Lenders Brace for Rush of Recovery Loan Requests
The Small Business Administration is expecting such a large amount of requests for its new deferred-payment, no fee-loan program that is has capped the number of loans lenders can approve per week.
The America's Recovery Capital program, which will be available June 15, will offer interest-free loans and deferred payments of up to $35,000. Established, viable, for-profit small businesses are eligible for the loans, which will be used to pay principal and interest payments on existing qualifying debt. Repayment will not begin until 12 months after the final disbursement. The SBA will pay monthly interest to lenders at prime plus 2% throughout the term of the loan.
The SBA expects lenders to make about 10,000 ARC loans, said Eric Zarnikow, SBA associate administrator for capital access, during a conference call this morning. The agency is limiting loan approvals to 50 per week per financial institution with no more than 1,000 in total. If the lender does not meet the 50 threshold for a given week, they can roll the remaining amount over to another week, Zarnikow said.
"We are expecting high demand. We expect there will be a ramp up when [lender training is done]," Zarnikow said.
More lender information can be found at http://www.sba.gov/idc/groups/public/documents/sba_homepage/sba_rcvry_act_arc_lnderloans.pdf.