David Kirkpatrick

June 18, 2009

SBA’s America’s Recovery Capital loans

This Small Business Administration program looks like a boon for Main Street (remember way back when small to mid-sized business was called “Main Street?” Oh yeah, that was just a few months ago … ) as long as banks decide to play nice.

I understand banking’s fear of becoming over leveraged, and the pressures being put on banks by regulators to keep adequate cash reserves. At the same time the stimulus money was injected into the market to, you know, stimulate. Cash on bank balance sheets is stimulating nothing other than possibly some bank managers’ pants.

The program is there, the cash is there so here’s some advice to the banking world — get with it and start stimulating.

From the link:

Struggling small business owners can begin applying next week for an interest-free debt-relief loan through a new Small Business Administration program — if, that is, they can find a bank to process their application.The new “America’s Recovery Capital” (ARC) loan program, authorized by February’s stimulus bill and slated to launch on June 15 after four months of planning, aims to make small, government-backed loans available to viable companies laid low by the recession. (For full details on ARC eligibility and loan terms, click here.) But the loans will be made and managed by SBA lenders, and so far, few have jumped on board.

Before the details of the program were released on Monday, lenders were hesitant to commit, concerned that there wasn’t enough economic incentive for them. Now, with key details about how the program will work finally available from the SBA, many haven’t retreated from their initial wariness.

“While we have received a few requests from our customers, we are still leaning against it,” says John Handmaker, president of Quadrant Financial, a small business lender based in Louisville. “The guidance from the SBA indicated rates and terms, which have provided some clarity, but we’re not 100% certain about what we need to be careful of. We don’t feel we have a solid grasp of the standard operating procedures and rules, and we’re not going to jump in until we really understand it.”

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