New small business loans fail to reach intended target
| Thursday, Aug 27 2009 05:09 PM
Last Updated Thursday, Aug 27 2009 05:11 PM
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For a list of lenders that participate in the America's Recovery Capital, or ARC, loan program, go to:
http://www.sba.gov/idc/groups/public/documents/sba_homepage/sba_recovery_arc_lenders.pdf
Stria has a problem many local businesses would envy.
The Bakersfield-based document imaging company is growing -- fast. So fast that earlier this year it had to borrow money to keep up with demand.
President and Chief Executive Officer Jim Damian said he had no trouble obtaining $600,000 in Small Business Administration-backed loans from a bank, and is satisfied with the federal government's response to the recession.
"Is there more the government could do? Sure. But I think overall, they've done OK," Damian said. "If we hadn't got these loans, we wouldn't have been able to sustain our current level of growth, so it's worked really well for us."
Others aren't quite as pleased. In some quarters, there is grumbling that the bulk of the government's resources seem to be going to big corporations rather than the small and mid-sized companies responsible for creating most of the nation's jobs.
"If you ask most business owners and even consumers, I'm sure the impression is that more could be focused on smaller businesses, especially when you look at the difficulties they're having and the value they bring to their communities," said Rick Riley, chairman elect of the Greater Bakersfield Chamber of Commerce.
President Obama signed the American Recovery and Reinvestment Act into law in February. It contained a wide array of measures aimed at jumpstarting the economy, including the America's Recovery Capital, or ARC, loan program.
ARC loans of $35,000 per company are intended to fund payments on one or more existing small business loans for up to six months.
They're designed for businesses that, despite having been profitable in the past, are struggling to make loan payments since the onset of the economic downturn.
The interest-free loans carry a 100 percent guarantee from the SBA to the lender. SBA fees for such loans are waived, and repayment is deferred for at least 12 months.
If you look at local SBA lending overall, it's up since the American Recovery and Reinvestment Act became law.
In the fiscal year Oct. 1, 2008 to March 31, 2009, there were 23 loans in Kern County totaling $7.3 million, according to the SBA.
In just the first four months since the law took effect, there have been 33 loans for $9 million in Kern County.
But if you look at the ARC program specifically, not one loan has been granted locally.
"I don't know anyone who's gotten one," said John Willingham, owner of the Bakersfield office of SunBelt Business Brokers, which applied for an ARC loan unsuccessfully. "I think they created this program just to appease people, but it's not really doing anything."
In fairness, about 1,120 ARC loans totaling $36 million have been awarded nationally, according to the SBA.
But that's paltry, said Rep. Kevin McCarthy, R-Bakersfield, who favors tax cuts for small business owners.
"We again see the problems that occur when we pass an economic stimulus package rapidly without transparency," he said.
The SBA insists ARC's low loan rate will change.
"Banks are starting to see the value of the ARC program, and the number of participants is growing every day," said Carlos Mendoza, director of the SBA's Fresno District Office, which oversees Kern County.
