Compared to the trillions of dollars being dumped on future generations of Americans to grow government and to create temporary jobs with make-work programs, here is one program, maybe the only program, that is designed to help small business. Emphasis on small.
America’s Recovery Capital (ARC) Loan Program is a new temporary guaranteed-loan program authorized by the American Recovery and Reinvestment Act of 2009 (the Recovery Act). ARC Loans provide small businesses access to the capital needed to drive economic recovery and to retain and create jobs.
ARC Loans are deferred-payment loans of up to $35,000 available through SBA’s 7(a) participating lenders. Potential borrowers are viable, for-profit small businesses located in the United States that need short-term help to make their principal and interest payments on existing, qualifying loans. ARC Loans are interest-free to the borrower, 100% guaranteed by SBA to the lender, and have no fees associated with them. SBA pays the interest to the SBA 7(a) lender making the loan. ARC Loan funds are to be used for payments of principal and interest for up to six months on existing, qualifying small business loans.
The program sounds good to those that don’t own or run a small business, though not near as bold as the programs the administration is implementing to grow government.
The practicality of a program like this is limited in scope and effectiveness. $35,000 would only last a few months at best for a typical small business, depending on the overhead, number of employees, and benefits associated with employment. It is fair to say that the economic troubles this economy is in will last a lot longer than a few months. However, it does account for the ‘save or create’ rhetoric coming out of Washington.
Why this program isn’t in the news is another story.
Below is a communication sent to SBA employees by Eric R. Zarnikow, Associate Administrator for Capital Access.