Get government loans to help with paying debt and bills.

The federal government has begun an assistance program to connect troubled businesses and others with interest-free, deferred-payment loans of up to $35,000. The program, called America's Recovery Capital (ARC), is a result of the stimulus plan. These loans can be used to pay for mortgages, credit card debt and bills, lines of credit, capital leases, utility bills, notes payable to vendors, and pay vendors and creditors.

The ARC loans are designed to make up to $35,000 available to struggling small business owners and others to help them make payments on existing loans they have have outstanding, even including credit card debt. And those who take advantage of the government debt assistance program do not have to start paying the money back for a 12 month period of time. The government loans off lower interest rates, longer repayment terms and also allow more flexible collateral requirements than standard bank loans. Also, read how the government is putting pressure on banks to offer additional credit card debt relief.

Details of loans from America's Recovery Capital (ARC)

The exact terms of the repayment plan include : borrowers can use the government ARC loans to make payments for up to six months on their existing debt, with absolutely no repayment due on the loan for another year. After that one year timeframe, the business has a total of five years to pay back the loan principal. During this timeframe the government will pay for the interest payments attributed to the loan.

 

 

 

In addition to the interest free loans, the federal government Recovery Act also will temporarily eliminates SBA charges, such as the loan fees, and it will also create new tax benefits and advantages for businesses that take out with SBA-backed loans. the program has also been expanded. For example, small businesses that need surety bonds to bid on and compete for service and construction contracts can now also qualify for SBA-backed surety bonds of up to $5 million, and in some cases up to $10 million, which is more than twice the previous $2 million maximum that they were able to previously receive.

Still, arguably the number on feature of the government debt help being provided is that borrowers can use the interest free loans for relief from virtually any other business debt, including such expenses as a home equity loans used to finance business operations, commercial mortgage or lease, other bank or financial institution loans that were made outside the SBA program, notes payable to suppliers, and credit card debt. The last item is a key feature of the aid. Borrowers can use the government ARC loans to cover payments on their personal credit cards if the money was borrowed on their cards for business expenses.

It is currently estimated that thousands of deferred-payment loans will be authorized to provide help. Funding will be available up thru September of 2010 or until the money in the program runs out.

The loans will be originated by traditional banks and lenders, but they will be guaranteed by the SBA. And though the bank or lender must approve the loan being originated, securing SBA-backed assistance shouldn't be more any more difficult than getting a loan in more robust economic times, as the government will be doing what they can to ensure credit is flowing.

In almost all cases the government interest free loans are getting approval from banks and lenders, because the lender know how the program works and what the feds are looking for. After all, the risk is lower to banks as there are federal guarantees, so the banks can make money, and both banks and the feds want to see a good business succeed. Call your local bank or lender, or visit sba.gov for more information.