Magazine article American Banker

House Passes Bill to Lift Key Arc Loan Restriction

Magazine article American Banker

House Passes Bill to Lift Key Arc Loan Restriction

Article excerpt

Byline: Emily Flitter

WASHINGTON - The House voted Wednesday to expand a small-business lending program created by the stimulus package and allow more borrowers to access it.

A bill to reauthorize some Small Business Administration programs included a provision that expanded the America's Recovery Capital loan program, which allows SBA lenders to make no-interest loans of up to $35,000 to help small businesses meet immediate cash needs.

The program currently does not allow businesses to use Arc loans to make payments on existing SBA loans. But the new provision, tucked into a bill House Small Business Committee Chairman Nydia Velazquez, D-N.Y., submitted to extend the authorization of some SBA programs, would lift that restriction.

Though lenders had previously cited the exclusion of existing SBA borrowers as a problem with Arc, it was unclear Wednesday whether lifting it would have much of an effect on the program, which got off to a sluggish start. Some lenders said more changes would be necessary.

"We're hopeful that Congress will consider working capital as a use of proceeds under a revised ARC Program," said Tom Burke, a senior vice president at Wells Fargo & Co.'s SBA lending division. "We are strongly in favor of making the process easier for borrowers and look forward to seeing what comes out of" Congress.

Robert Franko, the chief executive officer of Beach Business Bank in Manhattan Beach, Calif., said the change was a "great idea," though he added, "They also need to increase the amount; $35,000 per loan is not enough to right the ship in many instances."

Lynn Ozer, an executive vice president at Susquehanna Bank, was less enthusiastic."This will not make me anymore excited about the program, because it is too burdensome from a paperwork perspective for both the bank and the borrower," she said. …

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