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A Different Kind of Boot Camp

GAO ruling assailed; Vets Urged to Act Quickly to Overturn

ARC money will go fast, from the Tampa Bay Business Journal... Small Business Administration Bridge Loans Likely to go Quickly

Week of 22 June 2009

A Different Kind of Boot Camp

By BILL KACZOR | Associated Press Writer

TALLAHASSEE, Fla. - Former stockbroker Greg Amira, who barely survived the Sept. 11, 2001, terrorist attack on the World Trade Center and later was injured in Iraq as an Army reservist, now wants to get into something safer: pizza.

His goal is to start a franchise pizza restaurant and a "boot camp" for disabled veterans is helping him do it.

Amira is among 19 participants attending the "Entrepreneurship Boot camp for Veterans with Disabilities" at Florida State University, one of five universities offering the program across the country.

Amira's classmates have business plans ranging from printing to a helicopter commuter service. They wrapped up a week of in-person study with professors and business people Tuesday.

"This is probably the best thing that's happened to me in a long time," said Amira, 39, now living in Trinity, Fla., near Tampa. "I think it's helped me avoid quite a few mistakes."

The boot camp also includes a three-week online course and a 12-month follow-up of mentoring and other support.

The privately funded program began in 2007 at Syracuse University. It has since spread to Florida State, Texas A&M University, the University of California, Los Angeles and Purdue University. About 100 veterans have graduated from the program since it began.

It's open to post 9-11 disabled veterans. Nearly 300 applied for about 120 slots nationwide this year, said Randy Blass, director of Florida State's camp.

"We're trying to catch these folks in a life transition," said Blass, an assistant professor of organization behavior and a retired Air Force lieutenant colonel.

Blass said the veterans typically need information about the basic nuts and bolts of running a business. They usually leave with more questions than answers because they've learned what questions they need to ask before they can get started, he said.

For Amira it's a transition back into a life in business that was shattered when two hijacked airliners crashed into the World Trade Center's twin towers.

Then a vice president for Morgan Stanley, Amira worked on the 73rd floor of tower No. 2. He made it out but went to the first tower to help others escape when it collapsed. He was trapped in the rubble for five hours, suffering a badly damaged elbow, head trauma, burns and other injuries.

That didn't stop the Army from calling the reserve captain into active duty and sending him to Iraq in 2006. Amira suffered back and brain injuries in combat and has post traumatic stress disorder.

He's interested in opening a Little Caesars Pizza franchise because the company offers special help for disabled veterans.

"I don't need the money," said Amira, who gets disability benefits and abandoned his "spend, spend, spend" lifestyle after 9-11. "I need something to keep my brain busy."

Warrant Officer 4 Johnny Moncayo, 46, wants to combine his experience as an Army helicopter pilot with what he's learned at the camp to launch a commuter helicopter service in Alabama when he retires at the end of July.

As a result of the advice he's gotten at the camp, Moncayo, who is stationed at Fort Rucker, Ala., has scaled back his business plan to make it more manageable.

Moncayo said it also is helping him adjust to being his own boss after the ordered life he's led in the military.

"They tell you what to do, they tell you what time to get up," he said. "When you come into the business world that structure is gone. It is up to you to go out and find it, to make it happen."

A couple of last year's graduates returned to help inspire this year's class.

Dan Hash of Little Rock., Ark., described how he turned pigeon racing -- a hobby he began while growing up in Layton, Utah -- into a business that releases white doves at weddings and funerals. His United Doves LLC is in five cities now and he plans to expand.

J.R. Martinez, who landed an acting job in New York on the daytime television program "All My Children," urged fellow veterans not to give up their dreams.

"You don't quit and you listen and learn from other people," he said in an interview. "Don't be afraid of the fear."

~ ~ ~

GAO ruling assailed;
Vets Urged to Act Quickly to Overturn

(Editor’s note: The following is an e-mail from Wayne Gatewood, president and CEO of Quality Support. Wayne is a staunch veterans’ advocate. Here he vents his feeling on a GAO ruling that give Hub Zone firms precedence in the awarding of federal contracts.)

I have been sending out a number of e-mails regarding the HUB Zone Ruling that sets HUB Zone Small Businesses above and before SDVOSB’s. It's simple folks, because of this Ruling, Contracting Officers are going to first go to HUB Zone Small Businesses before they come to SDVOSB’s. Is this fair, is this legal, is this contradictory to current mandate, FAR, or CFR?

GAO wrote the Ruling and is standing by it but in the meantime SBA is doing all they can to get this thing turned around. We know one thing for sure, this ruling is counter to the very purpose and Spirit and Intent of PL 106-50....this Ruling tramples on a Small Business Program afforded us by virtue of our dedicated Military Service to our Country. Shame, shame..... Are the words of PL 106-50 that hollow? Why create a Program for us and then allow it to be trashed? God forbid, why is it that Vets have to fight like hell to gain and keep every inch of ground we gain? We go overseas to fight in Wars thousands of miles away only to come back home and have to "convince" our Government we merit parity at the procurement table.

Congress...here is what you told us:
PL 106-50
SEC. 101. FINDINGS. Congress finds the following:

(1) Veterans of the United States Armed Forces have been and continue to be vital to the small business enterprises of the United States.

(2) In serving the United States, veterans often faced great risks to preserve the American dream of freedom and prosperity.

(3) The United States has done too little to assist veterans, particularly service-disabled veterans, in playing a greater role in the economy of the United States by forming and expanding small business enterprises.

(4) Medical advances and new medical technologies have made it possible for service-disabled veterans to play a much more active role in the formation and expansion of small business enterprises in the United States.

(5) The United States must provide additional assistance and support to veterans to better equip them to form and expand small business enterprises, thereby enabling them to realize the American dream that they fought to protect.

It sounds so good..............

Now, back to the GAO Ruling. I have been receiving a number of e-mails and calls regarding this HUB Zone topic and I am always glad to answer questions to the best of my limited ability. However, it's time for SDVOSB’s doing business with the Feds to become personally fully cognizant of this ruling and to take very energetic, individual, and collective action to kill it.

Given the words in FAR "may" vice "shall," something we have been complaining about for years but have done too little to get changed, it could and most likely will, take an Act of Congress (literally) to get the Laws rewritten in order to have this GAO Ruling become a thing of the past.

The GAO Ruling is provided herein in its completeness and is also attached as a pd for you to forward to other SDVOSB’s and friends of SDVOSB’s. The SBA correspondence that was sent to GAO protesting this errant ruling is also attached.

Following is a Link to a blog that contains some good questions and answers about the GAO Ruling.

http://www.wifcon.com/discussion/index.php?showtopic=194

If you are a SDVOSB, call Congress NOW!!! Call and e-mail and Fax the House and the Senate Small Business committees NOW!! Call your local Congressional Office in and around your home towns. If we do nothing we will be left with nothing. Let's rally together to get this done........NOW!!!

Prayers to our Troops and their families everywhere.
Semper Fi
Wayne

GAO Decision

Matter of: International Program Group, Inc.
File: B-400278; B-400308
Date: September 19, 2008

Leonard Holzworth for the protester.

Major Matthew J. Kent and Theresa M. Young, Esq., United States Marine Corps, and John W. Klein, Esq., and Laura Mann Eyester, Esq., Small Business Administration, for the agencies.

Eric M. Ransom, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Given the unambiguous language of the applicable statutes regarding the Historically Underutilized Business Zone (HUBZone) and service-disabled veteran-owned small business concern (SDVOSBC) programs, contracting agency, before proceeding with an SDVOSBC set-aside, must first reasonably consider whether the conditions for a HUBZone set-aside exist, and, if they do, agency must proceed with a HUBZone set-aside.

2. Protests challenging agency’s decision to acquire services through SDVOSBC set-asides are sustained where the agency failed to reasonably consider the possibility of a HUBZone small business set-aside, by failing to make a reasonable inquiry into the availability of HUBZone small businesses.

DECISION

International Program Group, Inc. (IPG), a Historically Underutilized Business Zone (HUBZone) small business, protests the decision of the United States Marine Corps (USMC) to issue order No. M00681-08-P-0296 on a sole-source basis to Veteran Government Services (VGS), a service-disabled veteran-owned small business concern (SDVOSBC), and to set aside for competition restricted to SDVOSBCs solicitation No. M00681-08-T-0101. Both the order and the pending solicitation are for support services for pre-deployment training exercises.

We sustain the protests.

Background

The two procurement actions challenged by IPG concern USMC requirements for “Block II” pre-deployment training for Marine units at Camp Pendleton, California. “Block II” training involves realistic situational training exercises. IPG is a HUBZone small business that provides pre-deployment training support services, including role players, special effects, and support personnel. During the time period prior to the filing of these protests, IPG was an incumbent contractor providing pre-deployment training support services at Camp Pendleton under a precursor to the order and solicitation challenged here. The order that IPG was fulfilling during that period had been competed as a total small business set-aside. VGS, the firm performing the order at issue in the protest, is an SDVOSBC that also provides pre-deployment training support services and has received orders to provide those services at Camp Pendleton pursuant to competitions conducted as total small business set-asides.

On May 21, 2008, the contracting agency received a requisition for additional Block II pre-deployment training and training support services. This requirement exceeded the value of the simplified acquisition threshold.1 In determining whether a socioeconomic set-aside was appropriate for the procurement, the contracting agency considered several issues such as which companies would be qualified, the agency’s progress towards its small business contracting goals, and the short lead-time for the procurement. Contracting Specialist’s Supplemental Statement, Sept. 8, 2008, at 1. The short lead-time in particular resulted in the agency first considering a sole-source award to a HUB Zone small business. Id. The contracting specialist assigned to the procurement states that he considered a HUB Zone sole-source based on his experience that only one HUB Zone small business, IPG, had submitted quotes in response to previous solicitations for similar requirements. Id. However, the contracting specialist had concerns related to certain restrictions on HUB Zone sole-source awards that caused him to turn his consideration to the possibility of an SDVOSBC sole-source award. Id. at 1-2.

Over the span of time the contracting specialist had worked with the pre-deployment training requirements, only one SDVOSBC, VGS, had received an order for training support services. Id. at 2. Nonetheless, the contracting specialist conducted a small business search to determine whether there were two or more SDVOSBCs interested in performing the work, which would have precluded an SDVOSBC sole-source award. Id. The search identified 25 SDVOSBCs; however, after contacting 22 of the 25 companies, the contracting specialist determined that only VGS was interested in

Note: 1) The order that was ultimately issued to fulfill this requirement had a value of $159,780.

competing for the contract. 2 Id.; AR, Tab 12, Contracting Specialist’s Statement, July 17, 2008, at 1. The contracting specialist therefore recommended an SDVOSBC sole-source award, and the agency issued order No. M00681-08-P-0296 to VGS on June 10. Because no solicitation was issued in connection with this requirement, IPG was initially unaware that an order for a requirement similar to the requirement it was fulfilling had been issued on a sole-source basis to VGS. IPG discovered the order through its own contract work at Camp Pendleton, and filed a protest of the order with our Office on June 16.

Shortly thereafter, the agency received another requisition for Block II training, the value of which also exceeded the simplified acquisition threshold,3 and followed the same decision-making process that had resulted in the sole-source order to VGS. Contracting Specialist’s Supplemental Statement, Sept. 8, 2008, at 3. However, in this instance, the agency became aware that a second small business was interested in competing for the requirement--Lexicon, Inc., a woman-owned, SDVOSBC, and HUB Zone-certified small business. AR, Tab 12, Contracting Specialist’s Statement, July 17, 2008, at 2.

The contracting officer who made the ultimate set-aside decision in this case states that she considered the HUBZone, 8(a),4 and SDVOSBC small business programs, and the agency’s progress towards its small business contracting goals. Agency Response, Aug. 7, 2008, Tab 1, Contracting Officer’s Statement, at 1. In considering the agency’s contracting goals, the contracting officer determined that the contracting activity had exceeded its goals, but that its parent activity was below its targets for both HUBZone and SDVOSBC contracting, and was further from its goal with regard to SDVOSBCs. Id. On that basis, the contracting officer issued solicitation No. M00681-08-T-0101 as an SDVOSBC set-aside on June 23. IPG filed its protest challenging the solicitation on June 26.

IPG argues that the agency’s decisions to proceed on a sole-source basis and to set aside the procurements for SDVOSBCs were improper, and that the agency instead was required to set aside both procurements for HUBZone small businesses. As explained below, we agree that the agency failed to reasonably consider whether the conditions requiring a HUBZone set-aside were present in each procurement and we sustain both protests on this basis.

Note: 2) However, we note that the contracting officer stated that there had been inquiries from several SDVOSBCs. Agency Report (AR), Tab 6, Contracting Officer’s Statement, at 1.

Note: 3) Amendment 2 to the solicitation stated that $250,000 was a rough estimate of the value of the requirement. Amendment 2, June 26, 2008.

Note: 4) Section 8(a) of the Small Business Act establishes a business development program under which, among other things, competition may be restricted to eligible small disadvantaged business concerns. See 15 U.S.C. § 637(a) (2006).

Small Business Program Requirements

With regard to the HUBZone program, the pertinent statutory provision states that, "[n]otwithstanding any other provision of law,"

a contract opportunity shall be awarded pursuant to this section on the basis of competition restricted to HUBZone small business concerns if the contracting officer has a reasonable expectation that not less than 2 qualified HUBZone small business concerns will submit offers and that the award can be made at a fair market price.

15 U.S.C. § 657a(b)(2)(B) (2006) (emphasis added). This provision is implemented in Federal Acquisition Regulation (FAR) Part 19--Small Business Programs. Mirroring the statutory language, the applicable FAR provision states that a contracting officer "shall set aside acquisitions exceeding the simplified acquisition threshold for competition restricted to HUBZone small business concerns," FAR § 19.305(a) (emphasis added), when the contracting officer has a reasonable expectation that offers will be received from two or more HUBZone small business concerns and award will be made at a fair market price. FAR § 19.1305(b). The FAR also provides that a contracting officer may, under certain circumstances, award contracts to HUBZone small business concerns on a sole-source basis, FAR § 19.306(a), but that the contracting officer "shall consider HUBZone set-asides before considering HUBZone sole source awards." FAR § 19.1305(a).

Our Office has interpreted the FAR implementation of the HUBZone program to require that acquisitions above the simplified acquisition threshold be set aside for HUBZone small business concerns if the agency determines that there is a reasonable expectation that offers will be received from two or more HUBZone small business concerns, and that award will be made at a fair market price. SWR, Inc., B-294266, Oct. 6, 2004, 2004 CPD ¶ 219 at 4. Consistent with that interpretation, our Office has also concluded that an agency must make reasonable efforts to ascertain whether it will receive offers from at least two HUBZone small business concerns. USA Fabrics, Inc., B-295737, B-295737.2, Apr. 19, 2005, 2005 CPD ¶ 82 at 5; Global Solutions Network, Inc., B-292568, Oct. 3, 2003, 2003 CPD ¶ 174 at 3.

In contrast to the mandatory language used in the statute and FAR provisions implementing the HUBZone program, the statute establishing the SDVOSBC program provides that a contracting officer may award contracts on the basis of competition restricted to small business concerns owned and controlled by service-disabled veterans if the contracting officer has a reasonable expectation that not less than 2 small business concerns owned and controlled by service-disabled veterans will submit offers and that the award can be made at a fair market price.

15 U.S.C. § 657f(b) (emphasis added). Similarly, the relevant FAR provision states that a contracting officer “may set-aside acquisitions exceeding the micro-purchase threshold for competition restricted to [SDVOSBCs],” FAR § 19.1405(a) (emphasis added), when there is a reasonable expectation that offers will be received from two or more SDVOSBCs and that award will be made at a fair market price. FAR § 19.1405(b). The FAR also provides that “a contracting officer may award contracts to [SDVOSBCs] on a sole source basis,” provided that only one SDVOSBC can satisfy the requirement and award can be made at a fair market price, among other requirements. FAR § 19.1406(a).

Thus, unlike the HUBZone set-aside program, which requires a set-aside if two or more HUBZone concerns are interested in submitting offers and award is expected to be made at a fair market price, there is no requirement to set aside a procurement for SDVOSBCs, DAV Prime, Inc., B-311420, May 1, 2008, 2008 CPD ¶ 90 at 3; rather, the decision to proceed with an SDVOSBC set-aside is discretionary with the contracting officer. MCS Portable Restroom Serv., B-299291, Mar. 28, 2007, 2007 CPD ¶ 55 at 5.

The threshold issue in both of IPG’s protests is the relationship between the HUBZone and SDVOSBC programs, specifically, whether a contracting officer must proceed with a HUBZone set-aside provided the listed conditions are present--a reasonable expectation that offers will be received from two or more HUBZone firms and that award will be made at a fair market price--or whether the contracting officer retains the discretion to proceed instead with an SDVOSBC set-aside.

The starting point of any analysis of the meaning of a statutory provision is the statutory language used by Congress. See Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980) ("We begin with the familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself."). Where the language is clear on its face, its plain meaning will be given effect; that is, if the intent of Congress is clear, "that is the end of the matter." Chevron, U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837, 842 (1984). Here, given the unambiguous language of the HUBZone and SDVOSBC statutes (with which the implementing FAR provisions are consistent), we conclude that a HUBZone set-aside is mandatory where the enumerated conditions are met, and that the discretion granted the contracting officer under the SDVOSBC set-aside program does not supersede the mandatory nature of the HUBZone set-aside program. To interpret the statutes otherwise, as in effect creating parity between the programs, would fail to give effect to the clear language of the HUB zone statute, which uses the mandatory term "shall," not (as in the SDVOSBC statute) the discretionary term "may." See Contract Mgmt. Indus., Inc. v. Rumsfeld, 434 F.3d 1145, 1147 (9th Cir. 2006) (holding that the HUBZone program "commands in unequivocal terms that a contract opportunity be designated as a HUBZone set-aside when certain criteria are met").

Sole-Source Order to VGS

Given our view regarding the relationship between the HUBZone and SDVOSBC programs, we conclude that the agency was required to reasonably consider whether a HUBZone set-aside was warranted before proceeding with the sole-source order to VGS under the SDVOSBC program. The record shows that the agency did not do so.

According to the contracting specialist, due to the urgency of the requirement, he first considered a HUBZone sole-source award, relying on his experience over the previous months that only one HUBZone concern, IPG, had submitted a quotation for a similar requirement, to conclude that there were not two or more HUBZone small businesses interested in submitting quotes. Contracting Specialist’s Supplemental Statement, Sept. 8, 2008, at 1. The contracting specialist did not further inquire into the availability of other HUBZone small businesses before turning to the possibility of pursuing an SDVOSBC sole-source order for the requirement. Id. However, although the contracting specialist also knew from experience that only one SDVOSBC, VGS, had submitted a quote for similar requirements, he nonetheless conducted a small business search to determine if there were two or more SDVOSBCs who could compete for the requirement, as the existence of two or more would have precluded a SDVOSBC sole-source order. Id. at 1-2.

Note: 5) We solicited the views of the Small Business Administration (SBA) on this issue. The SBA responded that it interprets the applicable statutes and regulations to provide for parity among the HUBZone, SDVOSBC, and other small business programs, such that after identifying qualified participants, the contracting officer has the discretion to choose among the programs based on consideration of the contracting activity’s progress in fulfilling its small business contracting goals, as well as other pertinent factors. SBA Comments at 6. The SBA’s current regulations reflect this view, stating only that the “contracting officer shall set aside [a] requirement for HUBZone, 8(a) or SDVOSBC contracting before setting aside the requirement as a small business set-aside.” 13 C.F.R. § 126.607(b). We are aware that a current FAR Case, 2006-034, Socioeconomic Program Parity, would amend the FAR to more closely align with the SBA’s interpretation. However, we also note that prior to August 30, 2005, the SBA interpreted the statute in a manner consistent with the current version of the FAR. 13 C.F.R. § 126.607(c) (1999). As discussed above, we conclude that FAR § 19.1305 in its current form properly implements the requirements of 15 U.S.C. § 657a(b)(2)(B), with regard to the facts presented here.

As discussed above, consistent with the mandatory nature of the set-aside program, our Office has concluded that an agency must make reasonable efforts to ascertain whether it will receive offers from at least two HUBZone small business concerns. Global Solutions Network, Inc., supra, at 3. Although the use of any particular method of assessing the availability of firms for a set-aside is not required, measures such as prior procurement history, market surveys, and advice from the agency’s small business specialist may constitute adequate grounds for a decision, so long as the agency undertakes reasonable efforts to locate responsible potential competitors. National Linen Serv., B-285458, Aug. 22, 2000, 2000 CPD ¶ 138 at 2. Our Office regards such a determination as a matter of business judgment, and we will not disturb that determination absent a showing that it was unreasonable. Id.

Here, we conclude that it was unreasonable for the agency to fail to make any inquiry into the availability of HUBZone small businesses other than IPG. While the contracting specialist and contracting officer considered their experience with recent procurement history for the requirement, the contracting officer also acknowledged that "recently, small business vendors have developed the capability to offer [these] services," AR, Tab 6, Contracting Officer’s Statement, at 1, and "the vendor base for these services has matured." Agency Response, Aug. 7, 2008, Tab 1, Contracting Officer’s Statement, at 1. Further, IPG has demonstrated that a routine search for HUBZone firms under the applicable industry code in California would have revealed Lexicon as a potential HUBZone competitor. IPG Comments at 4. Under these circumstances, we conclude that the contracting staff’s reliance solely on recent procurement experience, which may not have reflected an expanded field of HUBZone firms, was inadequate as a means to identify responsible potential HUBZone competitors, and we sustain the protest on this basis.

SDVOSBC Set-Aside

With regard to IPG’s protest of the SDVOSBC set-aside, as discussed above, shortly after issuing the sole-source order to VGS, the agency decided to proceed with an SDVOSBC set-aside for its additional requirements, without further considering a set-aside for HUBZone concerns. As with the sole-source award to VGS, we conclude that it was inconsistent with the HUBZone statute and FAR provision for the agency to set aside the requirement for SDVOSBCs without reasonably considering whether a set-aside for HUBZone concerns was required, based on reasonably assessing the availability of HUBZone firms, and we sustain the protest on this basis.

Note: 6) In fact, Lexicon was one of the 25 firms revealed by the SDVOSBC search; however, it also was one of the three firms on that list which the contracting specialist did not contact.

Recommendations

With regard to the sole-source order to VGS, shortly after the protest was filed the agency exercised its authority to override the statutory stay on contract performance on the basis of the best interests of the United States. See 31 U.S.C. § 3553(d)(3)(C)(i)(I) (2000). When we sustain a protest under those circumstances, our Office is to make recommendations without regard to the cost or disruption related to the agency terminating, recompeting, or reawarding the contract. 31 U.S.C. § 3554(b)(2). However, in this case, due to the limited duration of pre-deployment training support services orders, the order for the requirement issued to VGS was completely performed by July 16. As the order is completed and no other meaningful relief is available, we recommend that the agency reimburse the protester its costs of filing and pursuing the protest. 4 C.F.R. § 21.8(d)(1) (2008). The protester should submit its certified claim for costs, detailing the time expended and costs incurred, directly to the contracting agency within 60 days of receiving this decision. 4 C.F.R. § 21.8(f)(1).

With regard to the second protest, the agency has refrained from issuing an order under the SDVOSBC set-aside. Accordingly, we recommend that the agency undertake reasonable efforts to ascertain whether it will receive offers from at least two HUBZone concerns and award will be made at a fair market price. If the agency’s research indicates that these conditions are met, the agency should cancel the current solicitation and reissue it as a HUBZone set-aside. We also recommend that the agency reimburse the protester its costs of filing and pursuing the protest. 4 C.F.R. § 21.8(d)(1). As with its claim under the first protest, the protester should submit its certified claim for costs, detailing the time expended and costs incurred, directly to the contracting agency within 60 days of receiving this decision. 4 C.F.R. § 21.8(f)(1).

The protests are sustained.

Gary L. Kepplinger General Counsel
Page 8 B-400278; B-400308

~ ~ ~

ARC money will go fast, from the Tampa Bay Business Journal...

Small Business Administration Bridge Loans Likely to go Quickly

Tampa Bay Business Journal
by Kent Hoover Washington Bureau Chief

WASHINGTON — Small businesses that want emergency bridge loans from the Small Business Administration should act quickly: The money for this program likely will run out in a few months.

The SBA will begin accepting applications from lenders for its new America’s Recovery Capital loans June 15. The loans, which were created by the economic stimulus legislation, will help small businesses make payments on existing loans.

Through this program, small businesses can borrow up to $35,000 to make up to six months of payments on qualifying loans, including credit cards if that debt was used for business purposes. The loans will be made through private-sector lenders, not the SBA itself.

Borrowers won’t have to start repaying the ARC loans until a year after they receive their last ARC loan disbursement. They then will pay back the principal on the ARC loan over five years.

Small businesses won’t have to pay interest on the loans. Instead, the SBA will pay the lender a monthly interest rate of prime plus 2 percentage points. The SBA also will guarantee 100 percent of the loan’s amount.

To be eligible for the loans, small businesses must show they were profitable or had positive cash flow in at least one of the past two years. Future cash flow projections must demonstrate that the businesses will be able to repay their debts, including the ARC loan.

Borrowers can’t be more than 60 days past due on any loan being paid through an ARC loan, and they must have a business credit score that is acceptable to the SBA. ARC loans can’t be used to make payments on an SBA loan made prior to Feb. 17, 2009, the date the economic stimulus bill became law.

To be eligible, small businesses also must show that they are experiencing an immediate financial hardship, such as declining sales or difficulty making payroll.

The SBA hopes small businesses will use the ARC loans as “breathing room to rework their business strategy in order to position themselves for future success,” said Eric Zarnikow, who heads the agency’s Office of Capital Access.

Most of the loans probably will be made through lenders that already have a business relationship with the borrowers, Zarnikow said.

Small businesses interested in an ARC loan should first contact their current lender, according to the SBA. Lenders that currently don’t make SBA-guaranteed loans can join the program in a process that takes about a week.

The agency has enough funding for the ARC program to make about 10,000 loans. Zarnikow expects high demand for these loans, but he said it may take some time for some lenders to ramp up.

The loans will be available until the money for the program runs out or until Sept. 30, 2010, whichever comes first.

Zarnikow expects the loans “will go pretty quickly.”

Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders, agreed the “funding will be exhausted rather quickly.”

For lenders that have customers that were profitable in 2007, took a hit in 2008 and could survive this year with a little help, “this is the product,” Wilkinson said.

~ ~ ~

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ARC money will go fast, from the Tampa Bay Business Journal... Small Business Administration Bridge Loans Likely to go Quickly

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VA Announces Recovery Spending Includes $250 Payment to Eligible Veterans

VA Officials Barred From Testifying Before Subcommittee

New VA Clinic To Be Dedicated In Early May

23 March 2009
American Legion Commander Praises Obama’s Change in Plan

Open Letter from VA Secretary

Congress to Agencies: Don’t Shortchange Vets on Contracting

16 March 2009
Is Stimulus harmful To SDVOSB’s?

Vets object to billing private insurance for service injuries

Agencies to direct stimulus funds to veteran-owned small businesses

09 March 2009
Lessons Learned on the Farm Still Apply to Small Businesses

Senator Lieberman Addresses Rumored Tricare Cuts

02 March 2009
Powerball is Stimulus Ticket?

Bid4Michigan—The New Name to Remember!

How Small Business Will Benefit From Obama's Stimulus

Point, Counterpoint On Stimulus Impact On Small Businesses

23 February 2009
Camp Lejeune Water Study Underway

Some Non-profits Shortchange Troops,
Watchdog Group Says

16 February 2009
Military Veterans Land More than
$250 Million in SBA Loans

SBA’s Bill Elmore on Patriot Express Reaching $250 Million

Landrieu and Snowe Highlight Key Small Business Provisions of
Economic Recovery Package
Renew call for elevating SBA Administrator to Cabinet-level status

09 February 2009
Ever Dream of Starting a Business?

Veterans Inaugural Ball Scam Investigated

02 Februrry 2009
Stimulus Bill Aims to Boost SBA Lending

D.C. Restaurant Apologizes to Marines