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

ramsburgsyuheo1544.blogspot.com
Through the program, small businesses that are havinhg trouble making payments onexisting non-SBA loans can borrow up to interest-free. The money can be used to make up to six month of payments of principal and interest on small busineszs debt ranging from mortgages to credit Small businesses will have one year after the final disbursement of thesre bridge loans before they have to start paying them They will then have five years to repahythe loans. The economic stimulus bill called for the SBA to creatse the new temporaryloan program.
The agench will guarantee 100 percent of the amount ofthese America’xs Recovery Capital loans, which will be made through its network of private-sectort lenders. SBA Administrator Karen Mills said the agencu will provide guidance to lenders on the ARC prograjm byJune 8, and will begi accepting loan packages from lenders June 15. “W e expect these loans to be inhigh demand,” Mill s said. Tony Wilkinson, president and CEO of the National Associatiojn of GovernmentGuaranteed Lenders, estimates the approximatelh $350 million in loans that will be availabl e through the program will be used up “rather quickly,” perhaps in thred months.
Lenders, however, are still awaiting crucialp details onthe program, he Only “viable” small businesses will be eligibl to receive the loans, for example, and the SBA hasn’t definef viable yet. Plus, the SBA will be subsidizingv the interest onthe loans, and the agencg has not told lenders what interest rate they can charge. The SBA will provid e these details to lendersJune 8, Mills said. In general, she viable small businesses are firms with a tracok record of success that are experiencingtemporarty difficulties, such as declining sales, due to the economicf downturn.
They also must present a plan demonstratinyg they will be able to sustain themselvesonce they’ve used up the emergenct loan, she said. Lenders that currently do not participats inthe SBA’s government-guaranteed loan programx will be given the opportunith to do so. This will enablre them to help borrowers who are behind on their loan andturn past-due loans into loanw that are current. This should result in more banksz becomingSBA lenders, a goal of both Millxs and Sen. Mary Landrieu, D-La., who chairs the Senate Small Business andEntrepreneurship Committee. Only abouft half of all U.S. banks make SBA Landrieu said.
If there is a problemm with the program that keeps banksfrom “we want to correct she said.