Small Business Loans from President Obama's ARC Program – Why It Doesn't Really Help — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Small Business Loans from President Obama's ARC Program – Why It Doesn't Really Help

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in The Business of Business Finance

I really hate to be so negative, but if we look at a couple simple facts, the entire ARC (America's Recovery Capital Loan Program) is a $350 million mess waiting to happen.  This entire process is flawed from top down.  It sounded good on the campaign trail (it always does), but 9 months later, what do we know?

1 - We have about 14 million small businesses (9 employees or less) in the US that collectively employ about 43 million individuals.  President Obama is hoping they can help lead the way out of the current recession by providing a minuscule fraction of them small business loans up to $35,000, provided it is used to eliminate other debt.

2 – Many banks do not have the capacity to make these business loans, but more importantly, they do not want to make the loans as there is no ability to charge any fees or generate any income.  It sounds great from the podium to say "no fees" but without incentive,  it is just a distraction while many banks are trying to heal their balance sheet.

sba loans

3 – The SBA doesn’t really want to make these small business loans.  Publicly they will say differently, but the SBA loans default rate in 2006 was 2.4%, which jumped to 4.8% in 2007.  2008 saw a record of 12% default which would be a complete disaster for a lending company charging 25% interest.  The typical small business loan through the SBA loan program has a current interest rate around 6%.  They (we) cannot afford more losses, regardless of the rhetoric.

So, the SBA can’t afford to make these small business loans, the banks do not want to make the loans, it is not a solution for the business owner’s problem or a solution to the recession.  So, why develop and promote the ARC program?  Well, it allows our government to show they are responsive and the Democratic Party can appeal to the small business owner in advance of the next election.  It is a shame they are willing to blow a third of a billion dollars in that pursuit.

So, that is the problem.  Let's talk about solutions for business owners who need working capital or a small business loan to really grow their company. My next post will outline four real world options that usually result in a small business loan or working capital:  Business Cash Advance, Equipment Lease, Secured Small Business Loan and SBA loan program.

If you have any experience with these programs, I welcome your comments.

{ 14 comments… read them below or add one }

Kirstel July 7, 2011 at 10:33 pm

I really love this blog, it helps me a lot especially I am still starting a new business with the acquired small business loan. This is such a great guide. Thanks, have a nice day!


Baratta January 26, 2011 at 4:34 pm

The small businesses are getting ignored in these issues, especially when looking for small business loans or financing.
The big corporations don’t seem to have an issue raising money by selling bonds, big bank loans. Small business loans aren’t getting approved that’s why so many are looking to business cash advances to leverage their credit card receipts.


lpn salary December 23, 2010 at 9:33 am

Awesome! Some really helpful information in there. Bookmarked. Excellent source.


Gross loan December 2, 2010 at 3:07 am

Not that I have any intention to copy your blog, but I truly love the design. Could you tell me which theme are you using? Or was it custom made?


iris November 9, 2010 at 2:51 am

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Small Business Loans


unsecured business loans November 13, 2009 at 6:50 am

This is great post keep updating me.Thanks for the great reading . I will pass this on to our Ira clients to read. I found this great website for free online service.


canadian November 6, 2009 at 4:55 am

Very interesting to read such posts


Todd July 30, 2009 at 10:05 am

FICO is supposed to be a score that will determine your ability to make payments in the future. One component of that calculation is how much debt you currently have.

Most business owners I talk with see their credit drop simply because they have a lot of outstanding credit (makes their business successful).

I do not believe there is a conspiracy at SBA to make “the boss” look bad. SBA lost $2.1 Billion last year, I suspect it will only get tougher in the second half of 2009.

Best of luck.



Todd July 30, 2009 at 10:01 am


Unfortunately I think it will be a waste of time. There are so many dynamics going on it is difficult to determine who to actually be angry with.

Business owners tell me they are having more success with small, local banks. many are lending and may be a better long term relationship.

If not successful there, you’ll need to think “outside the box”. You can visit for funding ideas or for more direct insight and help.

Best of luck.



Todd July 30, 2009 at 9:57 am


A business cash advance (visit if your credit is below 700 fico. If above, there are other, less expensive options that will require a personal guarantee but no collateral (visit

Best of luck.

Todd 240-482-3590


Redlady July 27, 2009 at 3:36 pm

Region banks is doing the same thing: They are securing their own debts and paying themselves out. This is totally unethical – I dont care what the process is. We should all get together and file a class action lawsuit against these banks


Todd July 10, 2009 at 5:02 pm

Unfortunately it may well be a waste of time. unfortunately, WF has to go through the process as that is politically correct. I think it will be valuable to our readers if you will keep us posted on how this develops.

Anyone else with an experience to share?


cash flow July 7, 2009 at 6:04 am

It’s a excellent blog.


Frank July 6, 2009 at 3:00 pm

I found the ARC program to be a dead end but still need working capital to dig out of terrible Q4 2009, where do I turn?
PS: Business owner videos are great, strait talk without BS is always welcome…


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