Financial Hardship - More on ARC Loans

After my email blast today it is apparent that there is a lot of interest in the ARC loan, so tonight I am sharing with you more info from the SBA site.  Below you will find the characteristics of economic hardship and the tests that have tot be met.

Lenders must document in their loan file a borrower’s eligibility for an ARC Loan. Small businesses must certify that they are experiencing an immediate financial hardship, identify the nature of the hardship, and provide evidence of the hardship as part of the loan application (SBA Form 2315, America’s Recovery Capital (ARC) Borrower Information Form).

Lenders must analyze the evidence provided and determine that an immediate financial hardship exists. Lenders will provide information on SBA Form 2316, Part B, Lender’s Supplemental Information for America’s Recovery Capital (ARC) Loan Guaranty Request, identifying the specific hardship experienced by the small business concern. The following categories of financial hardship are identified on the form:

Loss/Reduction of customer base (or loss/reduction of revenue of 20% or more over the preceding 12 months)
Increase in cost of doing business of 20% or more in the preceding 12 months
Loss/Reduction of 20% or more in working Capital and/or similar loss/reduction of short term credit facilities
Decline in gross margin of 20% or more over the preceding 12 months
Decline in operating ratio of 20% or more over the preceding 12 months
Inability to restructure existing debts due to credit restrictions within the preceding 12 months
Loss/Reduction of Employees
Loss/Reduction of Major Suppliers (major suppliers out of business); and/or
Other Immediate Financial Hardship – with Explanation

A small business concern may experience one or more of these financial hardships. The percentages and timing of the financial hardships identified above provide guidance to SBA Lenders. Minor variances in percentages and timing are allowable.

For more on SBA loan programs and their eligibility visit our website.  Also sign up for our FREE 10 Reports on Getting Your loan Closed.