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How to Get an ARC Loan

How to Get an ARC Loan
Step 1
Investigate the qualifications and eligibility for the SBA ARC Loan program. Generally, the ARC loan would like to lend money to businesses that have been affected by the downturn in the economy. For instance, the SBA is interested to know if your business needs:

  • Capital to pay employees
  • Capital to make current loan payments
  • Capital to purchase inventory
  • Capital to pay rent
  • Capital for day to day expenses

Step 2

Your business will need two financial statements. The first one will be for the previous two years. You will have to prove that in at least one of those years your business shows a profit. The second statement will be for the following two years. You will want to show the commercial lender that you can create cash flow sufficient to recompense all obligations, including the ARC loan.

Step 3

You will want to show the lender your strategy for use of the funds. Although the ARC loan can be used for paying existing debit, the cash that will be freed up should be used to create cash flow, retain or create jobs, or purchase inventory. You may also want to consider buying machinery or equipment.

Step 4

Find a lender. This is not as easy as it may seem.  The problem is that most banks do not want to loan money due to the low loan amount. It is a good idea for the potential ARC loan borrower to contact their current bank. If that institution is willing to lend according to the SBA’s ARC loan guidelines, then you need not look any further. In most cases, the lenders will want you to be a current and/or past customer of their bank. If you find that your current bank is not interested in funding an ARC loan, then ask for a referral to a bank that is. If this is the case with your current bank (i.e., not interested in ARC) then make this into an advantage and use it as a good opportunity to shop for a new financial institution that is friendlier to the small business owner.

Need to learn more? Go to the SBA ARC Loan home page for more education

What you need to know about SBA ARC Loan Eligibility

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