From Entrepreneur Magazine:
For small-business owners who have run into financial trouble, a new Small Business Administration loan program offers relief. But the America's Recovery Capital (ARC) loan will only help businesses that meet certain strict criteria.
ARC was funded with $225 million to provide five-year, zero-interest loans of up to $35,000 per qualified business. To qualify, businesses must demonstrate that sales are down, expenses are up or they are having trouble paying current loans or suppliers. Owners also must provide two years of cash-flow projections and explain their game plan for returning to profitability.
The program is not for new startups--to qualify, you must have been in business at least two years, and profitable for at least one of the past two years.
The SBA is working on building support from banks, which get just 2 percent interest over prime and can't charge a fee. Many national banks that make other SBA loans declined to participate. After a slow first month with just $16.4 million in loans approved by mid-July, $96.5 million in ARC loans had been made by early October. The program runs until September, or until funds are exhausted.
Working with a participating community bank where you already do business is helpful, says Neal Gordon, principal at the loan-intermediary firm Business Borrowers Alliance. That worked for Jim Brunberg, owner of recording studio Mississippi Studios in Portland, Ore., which needed help paying a loan for an ill-timed expansion. Brunberg worked with Albina Community Bank in Portland, where Mississippi has accounts, and said his ARC loan process was a breeze.
Not so for Auburn, Ala.-based decor-store owners Ingrid and Frank Brown, who sought an ARC loan from a national bank in June after sales sank 30 percent. Ingrid Brown says the bank was making ARC loans mostly to existing loan customers and turned the pair down. They reapplied and were approved for only $13,300. They passed on it to apply to a community bank where their businesses, The Villager and Auburn Art.com, have accounts. They got $15,000 of the $45,000 they wanted.
"We still need money to buy merchandise for the holidays," she says.
In the same issue, From Entrepreneur Magazine identifies LOCAL BUSINESS as the 5th ranked hot trend for 2010:
Demand is exploding for locally grown and made products--which means more support for mom-and-pop stores. The dividend: For every $100 spent at a locally owned business, $68 comes back to the community. Only $43 recirculates from national chain stores.
The "buy local" ethos has its roots in the farmers markets movement: There are almost 5,000 farmers markets across the country, the result of more than 5 percent annual growth for the past five years, according to the Department of Agriculture. Nearly 60 percent of consumers say they try to shop at a farmers market. Wal-Mart and Safeway recently added "Locally Grown" sections to their produce departments, and the USDA launched a "Know Your Farmer, Know Your Food" marketing campaign.Programs that promote community shopping, like Buy Local Orlando, are also popping up all over the country. About 40,000 Orlando shoppers have participated since May. "We like to appear that we're not just consuming for the sake of consuming," says Don Boudreaux, an economics professor at George Mason University. "It makes us feel good to show that we're socially conscious." --K.O.