Berthoud Recorder Staff
U.S. Sens. Michael Bennet and Mark Udall, and Congresswoman Betsy Markey have called on the Small Business Administration (SBA) to use newly available incentives from the economic recovery act and the Troubled Asset Relief Program (TARP) to help Colorado lenders extend credit to small businesses affected by the closure of New Frontier Bank.
The American Recovery and Reinvestment Act (ARRA) increased the SBA’s guarantees of certain loans and temporarily eliminated fees for borrowers and lenders. In addition, the Administration dedicated $15 billion in TARP money to unfreeze the secondary markets for SBA loans, which provides greater capacity for banks to extend credit.
In a personal letter to the SBA drafted Tuesday by Udall, Bennet and Markey, they urged the administration to work closely with Colorado lenders to “look for ways to extend much needed credit for small businesses that are struggling as a result of New Frontier’s failure.”
In particular, the legislators noted the immediate effects on a local level for small business owners on the Eastern Plains. Markey and Bennet previously sent letters to Secretary of Agriculture Tom Vilsack in the wake of New Frontier closure May 8. Approximately $250 million in emergency loans were provided to area farmers.
“This is a tough economic climate compounded by the failure of a local community bank.” Bennet said. “We have to leave no stone unturned in finding credit solutions for Colorado’s small businesses affected by the closure of New Frontier bank.”
Markey noted: “Add to [the] already difficult economic conditions, and we’re left with a grim situation for our region, state and country.” But, she added, Colorado businessses would have a better chance of succeeding, “if they can just make it through this rough patch, and bringing more tools to bear will help them get there.”
ARC Loan Program
Many local small businesses may soon be eligible for interest-free loans under a new program created by the American Recovery and Reinvestment Act (ARRA). The new “America’s Recovery Capital” (ARC) program allows small firms to take out loans of $35,000 to pay down existing business debts. Borrowers pay no interest on the ARC loans, and repayment does not begin for one year. The loan program was established through the ARRA in February.
To qualify for the ARC loans, small businesses must show financial hardship due to the economic, but still be viable according to SBA standards. Commercial lenders will issue loans to eligible businesses for payments of principal and interest for existing, qualifying small business debts like credit card obligations, mortgages, lines of credit, and balances due to suppliers, vendors, and utilities.
To apply for ARC loans, businesses should visit their local SBA-approved small business lenders. Loans will be available through Sept. 30, 2010, or until appropriated funding runs out. Additional information is online at www.SBA.gov/recovery/ARCloanProgram/index.html.