A provision in the American Recovery and Reinvestment Act has made loans available for small businesses affected by the economic downturn, Goleta officials announced Thursday.

“We want to make sure that our local business community has the information and tools they need to be successful in this challenging business climate,” said Vyto Adomaitis, director of redevelopment, neighborhood services and public safety for the city of Goleta.

Under the recovery act, the American Recovery Capital Program authorized $255 million in Small Business Association guaranteed loans to help existing businesses struggling with business loan payments because of the economic downturn. The program began Monday and will continue through Sept. 30, or when funds are depleted, whichever comes first.

“In addition to obtaining more information on this program by visiting the SBA Web site at www.sba.gov, the city of Goleta Web site has a comprehensive list of resources called ‘Tools for Businesses’ that has information on topics such as a business start-up kit, loan payment calculator, 85 business-related online classes, 750-plus business books, employer’s kit, a directory of sources of capital and more,” Adomaitis said.

The ARC loans must be used to make principal and interest payments on business loans, including mortgages, term and revolving lines of credit, capital leases, credit card obligations and notes payable to vendors, suppliers and utilities.

Funds cannot be used to pay principal or interest on SBA loans. Loans will be disbursed over six months, with a maximum loan amount of $35,000. Repayment begins 12 months after the last disbursement. Only principal must be repaid; there is no interest. Borrowers have five years to repay the principal.

— Kirsten Deshler is a public information officer for the city of Goleta.