While these ARC loans look good on paper, I have a...

2009-05-23T13:54:24.785-07:00

While these ARC loans look good on paper, I have a few concerns:

First, what about struggling, viable businesses that do not already have outstanding loans? Are we to just forget about them? Let them fail simply because they don’t have debt? These businesses also create jobs and impact their communities – but seem to be penalized because they don’t have current debt obligations.

Second, if these funds are to go to viable businesses – why can’t these businesses (if they are “viable”) re-structure their own debt obligations or even just make their payments in the first place – isn’t that what viable means? Viable to a bank means being able to service your current debt obligations.

Third, if these funds are supposed to be a bridge loan – what happens if this terrible economy lasts longer than we think? These monies will just prolong the inevitable of business closure or default if this bad economy last another 12 to 18 months. These loans are just pushing businesses onto a bridge that may end up going no where as no one really knows or can see the end of any economic bridge right now. Bottom line – more wasted taxpayer’s money if these businesses cannot pay these ARC loans back either.

Lastly, who is this program designed to really help. Throwing money at businesses that cannot meet current obligations does not really help these businesses. It does not solve the troubles these businesses face. If businesses are struggling and cannot make P&I payments now – giving them another loan just does not make sense. I see this more of a way to help banks cover some of their failing commercial loan assets – without giving them another formal bailout. This could be good if it entices banks to loosen lending for businesses (creditworthy businesses – let’s not get into that subprime stuff again). But, it seems more like a way of propping up banks’ toxic commercial assets over the next six to 12 months.

While this program may help relieve the short-term stress of some business owners, it really does nothing to help them in the long-term. I would rather see these funds going to help solve small business problems and not to band-aide programs in the hopes that a recovery will come sometime this summer.

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While these ARC loans look good on paper, I have a...