By Robert Freedman, Senior Editor, REALTOR® Magazine
Much of what NAR gets involved in at the federal level is high-profile, like protecting the mortgage interest deduction, but the association on a daily basis is involved in initiatives that fly below the radar yet pack a big punch.
A new loan program from the Small Business Administration is a case in point. Although the association didn’t have a hand in the introduction of ARC loans–the “ARC” stands for America’s Recovery Capital–it’s been engaging with SBA leadership on who should be eligible for these loans.
If you haven’t heard about these loans yet, it’s worth your time to check them out. I posed questions about these and other SBA loans to Scott Rinn, NAR’s senior policy analyst on business issues, and you might find what he said useful.
First, ARC loans are interest-free. You heard that right. They’re zero-percent interest loans and they’re fully guaranted by the federal government. You can make payments on a deferred schedule, too.
What can you use the money for? For starters, you can pay off your existing debt, up to $35,000 (that’s the maximum loan amount). That’s a tremendous deal, particularly if you have a lot of high-interest credit card debt you’re wrestling with. Imagine transferring debt at, say, 18 percent interest, to an interest-free, deferred payment loan.
There are limitations, of course. You can only transfer business-related credit card debt. So, the loans won’t help you on your personal finances.
Here’s a link to information on applying for an ARC loan.
SBA has improved its two flagship existing loan programs, too. These are called Section 7 (a) and Section 504 loans. Terms are more attractive now.
On the ARC loans, there’s some uncertainty whether independent contractors qualify as applicants. Some SBA offices have said yes, some have said no. NAR is seeking clarification on the question and is recommending that SBA provide a definitive yes. We’ll be communicating with you once we hear what SBA says.
[Editor's note: NAR learned on August 10 that the loans are in fact available to individual practitioners. The SBA clarified that point in a letter to NAR President Charles McMillan.]