ARC loans are hard to come by, SMB owners report

The Small Business Administration is getting mixed reviews for its new loan program, with struggling small businesses reporting that banks are still reluctant to get on board.

The America's Recovery Capital loan program, launched June 15, is one of the latest SBA initiatives under February's American Recovery and Reinvestment Act.

Yet with an increasing number of businesses defaulting on loans, and banks still dealing with the fallout from the subprime mortgage crisis, small business loans seem to be few and far between.

CNNMoney.com reported that the SBA issued 30 percent fewer loans than it did a year ago, and approved half as many loans in the first nine months of 2009 as it did last year.

Much of the blame is being placed on banks, which are reluctant to support ARC loans or are doing so with much tighter credit restrictions.

Two of the top small business lending banks, Bank of American and Capital One, may not support ARC loans - Bank of America is still reviewing the program, while Capital One will not be participating, the banks told the South Florida Sun-Sentinel.

Small businesses in need of business financing are encouraged to talk to their financial advisors or consider nontraditional lenders, experts advise.