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It's not too good to be true

Jasmina Meyer, Highlands Today

From left: Laura Vega, sales associate, helps Jim Harrison find an address recently at Alligator Pack and Ship in Sebring.

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By BILL ROGERS

Highlands Today

Published: June 14, 2009

AVON PARK - A loan with a 100 percent guarantee, no Small Business Administration guarantee fees and the interest rate is zero.

Sound too good to be true? Actually, it is true.

In addition to the stimulus package legislation that was passed in February of this year, a new program called the American Recovery Capital (ARC) Loan was created. The program starts Monday.

Jim Parrish, assistant director of the University of South Florida Small Business Development Center, gave the details of the ARC Loan during a seminar Wednesday at South Florida Community College. Approximately 25 people attended the event.

"Remember this isn't designed to bail you out of anything," Parrish said. "This is designed to buy you time waiting for things to improve.

"They are giving you basically six months worth of time," he added. "They will make debt service payments for six months then you are going to have to start making your normal ones again."

The ARC loan, because there are no interest charges, will have a "relatively small repayment on it," Parrish said.

A borrower can get up to $35,000 or six months worth of payments, whichever is the lower number, according to Parrish.

"If you have one note and you're paying $500 a month and you have no other debt then you get $3,000 on this loan," he said.

Parrish noted that no payments are made for one year. There will be a five-year amortization.

To be eligible, the applicant must have sales for two full years and have to be profitable in one of the last two years. The person has to show that cash flow projections are sufficient to meet loan payments over the next two years and can't be 60 days past due on loans.

Those who are interested have to apply through an SBA lender.

Parrish suggested for those who are to act quickly. He thinks there will be 10,000 ARC loans made in the United States because the "money will be gone by Sept. 30 of this year."

Dave Gibson, who owns Alligator Pack and Ship in Sebring with his wife Laura, attended the seminar. Gibson said he had heard about the ARC program and was interested when he heard about the seminar.

Gibson was hoping to be able to use the money to advertise the new services his business has to offer including document shredding and that he is now a licensed mover in Florida.

Although he doesn't think he qualifies for the ARC loan, Gibson said he learned a lot.

"I had no idea there were that many options," he said, noting that the materials that were given out contained good information.

Rich McCann, who is operations manager for Your Data Inc., an information technology company in Sebring, said he thought the seminar was "very informative."

McCann said he surprised that only 10,000 loans will be made.

Commenting on the recession, Parrish said the majority of economists believe the bottom will occur this year.

"The Fed is also saying unemployment will hit 9.8 percent this year," he said. "However, in every one I've research before things start returning to normal is three to four years after the bottom."

Someone in the audience asked "what is normal?"

Parrish responded "when the economy starts getting back to 2 to 3 percent growth a year."

Parrish said the highest unemployment rate outside of the Great Depression was 10.8 percent during the recession from 1983-85 when Ronald Reagan was president. The country had 13 percent inflation and the prime interest rate was 21.

For more information, go to Web sites www.sba.gov or http://sbdc.usf.edu or call 784-7379.

To be eligible, the applicant must have sales for two full years and have to be profitable in one of the last two years. The person has to show that cash flow projections are sufficient to meet loan payments over the next two years and can't be 60 days past due on loans.

To be eligible:

•Applicant must have sles for two full years

•Must be profitable in one of the last two years

•Has to show cash flow projections are sufficient to meet loan payments

•Cannot be 60 days past due on any loans

Bill Rogers may be reached at 386-5825 or wrogers@highlandstoday.com.

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