BIDDEFORD — The country’s economic problems are hurting companies large and small, causing many to downsize or fail. The American Recovery and Reinvestment Act, passed by Congress earlier this year, has provided hundreds of billions of dollars to bail out large financial institutions on Wall Street. Some of that money, through the Small Business Administration, is also making its way to smaller companies on Main Street.
The latest SBA program, the America’s Recovery Capital program that was announced Monday, is providing interest-free loans of up to $35,000 to eligible small businesses.
According to Congresswoman Chellie Pingree (D-Maine) the loans can be used by businesses to pay down existing debt. Firms using the program have one year before they have to begin repaying the loan.
“There are many businesses throughout Maine that would be viable in the long term if they could just make it through this rough patch,” Pingree said. “That’s why we created this initiative. The ARC program gives businesses the breathing room they need, so they can pay their bills, retain employees and play their traditional role as job creators in our economic recovery.”
These loans “are designed as a bridge loan to small businesses that are currently struggling because of the economy,” said Alden Turner, the senior area manager for the Maine District office of the Small Business Administration.
Turner said the SBA only began training lenders about the program last week.
Since the program is only one day old, and lenders are still learning about the requirements, Kennebunk Savings Bank Senior Vice President Eric Andrews said his bank hasn’t yet received requests for an America’s Recovery Capital loan.
However, he said, “clearly there are people having some difficulties.”
Money from the America’s Recovery Capital program cannot be used to start a new business or expand an existing business, said Turner.
It can be used to pay the principal and interest of some existing debt for items like credit card bills, mortgages, lines of credit, as well as balances to suppliers, vendors and utilities, according to Pingree.
“Small businesses are Maine’s most reliable job creators, generating seven out of 10 new jobs,” Pingree said.
“If our nation is going to lift itself out of this recession, we need entrepreneurs to start growing again,” said Pingree. “The ARC loan program is one element in a whole series of initiatives in the Recovery Act aimed at giving small firms the tools they need to lead our nation back to prosperity.”
Additional changes made through the Recovery Act ”“ which took effect earlier ”“ that help small businesses access financing include waiving closing costs to businesses for some SBA loans and increasing the loan guarantees to lenders to 90 percent of a loan, said Turner.
These changes decrease the cost of a loan to a business and lessen the risk to the lender making the loan.
Other changes on the horizon through the SBA, said Turner, include provisions for long-term building loans which will allow firms to refinance their existing loans at more favorable terms and rates, and increasing the bonding limits for the surety bond program which will help small construction companies that, for instance, may want to bid on a road project.
Pingree is holding a forum at the end of the month designed to inform small businesses about the different resources and programs available to them.
During the summer recess of Congress, Pingree has been traveling throughout Maine’s first district holding business roundtables. One issue that continually arose during these discussions, said Pingree’s Legislative Assistant Avery Ash, was that “small firms are having a hard time getting access to capital.”
On Tuesday, June 20 at noon, in Portland, Pingree will be joined by financial lenders, representatives of the SBA and other agencies that provide resources to small businesses to discuss how to access funds available through federal programs and other assistance to small business.
For more information and/or to RSVP call Rep. Pingree’s office at 774-5019.
—Staff Writer Dina Mendros can be contacted at 282-1535, Ext. 324 or dmendros@journaltribune.com
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