While the SBA expected a new program offering deferred payments and no fees to be in huge demand, only $4.6 million loans have been funded since the recovery effort was launched on June 15.
The America’s Recovery Capital program provides loans up to $35,000 to struggling small businesses facing immediate financial hardship. The interest-free loans carry a 100% SBA guarantee to the lender, charge no agency fees and offer deferred payments for 12 months after the last disbursement.
As of June 29, 139 loans totaling $4.6 million have been funded, according to the SBA. Seventy-two lenders have approved the loans, which were made in 28 states to businesses in 94 different industries. The SBA said it was expecting such a large amount of requests that it limited loan approvals to 50 per week per credit union and other lenders with no more than 1,000 in total. Overall, the agency said it anticipates the funding of 10,000 ARC loans.
Meanwhile, the $231 million First U.S. Community Credit Union in Sacramento, Calif. said it is receiving many ARC loan applications. The $222 million Bel Air, Md.-based Freedom Federal Credit Union said it would offer the loans.
Eric Zarnikow, SBA associate administrator for capital access, previously said after lenders are trained to process the ARC loans, there will be a ramp-up in activity.