Heritage Bank of Nevada became the first bank in the state to make a loan under a Small Business Administration effort to help small businesses weather the recession.
The SBA says banks statewide have been cautious about taking on the new America's Recovery Capital loan program that's part of the federal economic stimulus package.
Reno-based Heritage Bank made the loan to Custom Caps Shirts Etc., of Sparks.
"It sure helps with the cash flow," said business owner Mike Bass. Ryan Riggan, a commercial loan officer with Heritage Bank, emphasized that the bank is looking at the loans only for its existing commercial customers.
But for some of those bank customers, the ARC loans provide a low-hassle borrowing program that provides some breathing room.
The loans, which are 100 percent guaranteed by the SBA, are available in amounts up to $35,000. The loans can be used to repay other debt, including mortgages and business credit cards. No repayment is required for six months and repayment is scheduled over five years.
The SBA pays interest on the loans to banks, but small businesses don't pay interest on their borrowing.
Riggan said the first ARC loan moved through the SBA's approval process in about two weeks.
Nationwide, SBA had made 806 ARC loans totaling $26.2 million as of last week. The agency is approved to make $350 million in ARC loans.