ARC Loans - Are They For Real?Is Anyone Making Them?
By now, many of us have heard about the newest kid on the SBA loan block.
Known as ARC loans ("American Recovery Capital"), they have captured our imagination and fired us up with boundless hope.
But are they real, or simply a well orchestrated mirage? In another article I discuss how these loans work.
This article will focus on who is, or is not, actually lending.
We begin with a fundamental undisputed fact.
They have the best loan terms ever being produced by the SBA.
Who wouldn't want one? When was last time you were offered a business loan with no interest? Or better yet, with your first principal payment in twelve months? With a 100% loss guaranteed by the Federal government? And to top that off, to be used up to $35,000 for credit cards, conventional loans, and capital leases? OK, OK, we get the point.
Everyone would love to have one.
But the problem is banks are not jumping on this loan product.
Here is what is actually happening: oThe wording of the bill, namely section 506 of the American Recovery and Reinvestment Act, says banks cannot charge any fees.
Later pronouncements stated that the loans cannot be sold on the secondary market.
The lender would essentially be doing it for free.
oFrom any reasonable estimation, the paper work is onerous.
Tax returns, profit and loss projections, year to date financials, net worth, quarterly's, hardship declarations, etc.
A lot of paperwork for $35,000.
oAs a new program, no one is sure how successful it will be and how it will work.
oIt started off with a bang, but is now going out with a whimper.
oBanks are not stupid.
They have figured out how best to use this program.
Most are saying "No" altogether, but the ones that are lending are using it exclusively for their existing customers to re-write, at tax payers dollars, their client's existing credit cards and loans.
It is not being offered to new customers.
Some banks are not allowing the application unless you open an account with them.
In summary, it is a great loan product but few are lending.
Fortunately, there is a similar loan product, called stimulus loans, which are between $5,000 and $50,000, and are actually being loaned by banks.
It is wise to look into this alternative as well.
Those stimulus loans will be discussed in another article.
Known as ARC loans ("American Recovery Capital"), they have captured our imagination and fired us up with boundless hope.
But are they real, or simply a well orchestrated mirage? In another article I discuss how these loans work.
This article will focus on who is, or is not, actually lending.
We begin with a fundamental undisputed fact.
They have the best loan terms ever being produced by the SBA.
Who wouldn't want one? When was last time you were offered a business loan with no interest? Or better yet, with your first principal payment in twelve months? With a 100% loss guaranteed by the Federal government? And to top that off, to be used up to $35,000 for credit cards, conventional loans, and capital leases? OK, OK, we get the point.
Everyone would love to have one.
But the problem is banks are not jumping on this loan product.
Here is what is actually happening: oThe wording of the bill, namely section 506 of the American Recovery and Reinvestment Act, says banks cannot charge any fees.
Later pronouncements stated that the loans cannot be sold on the secondary market.
The lender would essentially be doing it for free.
oFrom any reasonable estimation, the paper work is onerous.
Tax returns, profit and loss projections, year to date financials, net worth, quarterly's, hardship declarations, etc.
A lot of paperwork for $35,000.
oAs a new program, no one is sure how successful it will be and how it will work.
oIt started off with a bang, but is now going out with a whimper.
oBanks are not stupid.
They have figured out how best to use this program.
Most are saying "No" altogether, but the ones that are lending are using it exclusively for their existing customers to re-write, at tax payers dollars, their client's existing credit cards and loans.
It is not being offered to new customers.
Some banks are not allowing the application unless you open an account with them.
In summary, it is a great loan product but few are lending.
Fortunately, there is a similar loan product, called stimulus loans, which are between $5,000 and $50,000, and are actually being loaned by banks.
It is wise to look into this alternative as well.
Those stimulus loans will be discussed in another article.
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