Thursday, June 11, 2009
I'm still in search of the elusive SBA ARC loan. Nothing will make you a proponent of small government faster than repeatedly seeing good government ideas poorly implemented. This SBA loan program is one of those. Take a good idea, helping small business with a bridge loan through the bad economy, and trash it's implementation. We've seen this with the last two mortgage "rescue" programs and it doesn't bode well for health care reform.
The problem, I think, is the compromises that our society requires. If the government used it's resources to administer these programs, they might be effective. There is infrastructure in place now for helping small business in this way. However, private industry and it's powerful lobbies insists on being involved, even when they don't want to be involved. That's the ARC loan in a nutshell. It's a 100% government backed loan that private banks can't be bothered with. It's just too small and not profitable enough, according to my bank manager. Since participating banks are the only place you can get these loans, the loans essentially don't exist. Still, the press makes a big deal about the loan program, with a little side note that, by the way, banks may not want to be involved.
The irony is that the more I learn about the ARC loan (the details are elusive) the more I think our business doesn't qualify. It's very much like the mortgage assistance programs. Requirements are so narrowly defined that most people don't meet the arcane qualifications. With the mortgage assistance program, it specified the two mortgage holders you could be with, your current home value range, your debt to equity ratio and a bunch of other requirements. If I'm reading the SBA ARC loan requirements correctly, the store is doing too well for one requirement, but not well enough for another. Figuring all this out is a maddening process. As a business owner, it's my responsibility to investigate all options, but I think the door is fast closing on this one.