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.

Implementation of new SBA loan program: America’s Recovery Capital (ARC) Loan Program EFFECTIVE: 6/5/2009

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.

Participating lenders may begin submitting ARC Loan applications to SBA on June 15, 2009. Delegated lenders are to submit their applications through e-tran unless the application is ineligible to be submitted under delegated authority. For non-delegated lenders (and for applications that are ineligible to be submitted under delegated authority), applications are to be submitted to the Standard 7a Loan Guaranty Processing Center (LGPC). Instructions on submitting applications to LGPC are found at www.sba.gov/aboutsba/sbaprograms/elending/lgpc.

The ARC Loan Program regulations are being published in the Federal Register on June 9, 2009, and are available for public inspection today at the following link: www.archives.gov/federal-register/public-inspection.

The ARC Loan Program Procedural Guide is available at the e-lending ARC section.

The new borrower and lender forms for ARC loans are available at www.sba.gov/tools/Forms/smallbusinessforms/fsforms. The following is a listing of the new forms:

Borrower Form:

SBA Form 2315: America’s Recovery Capital (ARC) Borrower Information Form (required to be completed by each proprietor, partner, officer, director, holder of 20% or more of voting stock of a corporate applicant, and any other person, including a hired manager, who has authority to speak for and commit the borrower in the management of the applicant business.)

Lender Forms:

• SBA Form 2316 (Part A): America’s Recovery Capital (ARC) Loan Guaranty Request (required to be completed for non-delegated processing)
• SBA Form 2316 (Part B): Lender’s Supplemental Information for America’s Recovery Capital (ARC) Loan Guaranty Request (required to be completed by all lenders either by submitting the completed form (non-delegated processing) or by completing the form through e-tran (delegated processing))
• SBA Form 2316 (Part C): Eligibility Information Required for America’s Recovery Capital (ARC) Loan Submission (required to be completed by all lenders). The form must be submitted to SBA for non-delegated processing. For delegated processing, lenders must complete the form and place it in the borrower’s loan file to be made available upon SBA’s request.

The new ARC authorization will be available shortly at www.sba.gov/aboutsba/sbaprograms/elending,

then click on “Authorizations” to locate the new ARC loan authorization.

In addition, a new section has been created for participating lenders at www.sba.gov/aboutsba/sbaprograms/elending/RECOVERY_INFO_LENDERS.

It includes hyperlinks to the ARC Loan Program procedural guide, the borrower and lender application forms, and the authorization.

A Federal Register notice setting the interest rate on ARC Loans will be published in the federal register this week.

Lenders or potential borrowers who have questions should contact their local SBA district office. A listing of local district offices may be found at www.sba.gov, then go to “Local Resources” to click on “District Offices.”