Just a few days ago I wrote another article for Entrepreneur Magazine which was picked-up by Reuters and and several other publications. See the entire article here http://entrepreneur.com/money/financing/article202382.html
It references the new America’s Recovery Capital (ARC)loan program. The ARC loan is a $35,000, interest-free, deferred-payment loan, fully guaranteed by the Small Business Administration and available to established, viable, for-profit small businesses suffering “immediate financial hardship.” This program is meant to be a savior for small businesses in touble but it seems to be nothing more than a publicity stunt by the current administration. There are 30 million small businesses in this country yet only 10,000 loans available. Huh?
I spoke to several of the supposed “participating banks” and they are quite nervous about the fact that they will be required to issue funds without receiving any of the loans’ principle from the SBA for a full year. In addition, the SBA is offering a lower interest rate than other loan programs.
The Coleman Report, a newsletter for banks, states that “the ARC loan program is already being positioned to be a failure, and lenders are going to be the key players behind that failure.” Even the SBA says it expects ARC loans to default at a higher rate than its other programs.
Is this the best our government can do to help small businesses to survive in this difficult time? As America’s small businesses continue to “take on water,” the jury is still out on whether the ARC loan program will be a lifeline to thousands of small businesses.