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The concept is that the federal government will provide interest free loans up to $35,000 for small business owners to assist them in surviving the current economic crisis. The program is administered through the Small Business Administration and begins on June 15, 2009.
The problem is that American banks refuse to participate even though the loans are federally guaranteed and the banks have zero risk. The interest rate for the loans is 2% above prime rate but the Banks decline to assist in the process of saving small business owners from default.
While the major banks had their hands out begging for bailout money it became clear that funding the banks was not the method to fund Americans in general. Instead, the banks closed lines of credit for viable business owners, discontinued credit cards, foreclosed on mortgage loans and generally withdrew from the credit markets altogether.
Hundreds of thousands of small business owners in the US are relying on the banks to fund the guaranteed loans but the banks have made it clear that they will not assist in the loan program.
Yet another example of the stranglehold the major banks have on the marketplace in the US. Fending for themselves is their priority, not the rebuilding of America. This may be the opportunity an enterprising bank could capitalize on, in essence making micro loans that are totally risk free for the bank.
It appears the SBA program is doomed to failure because the banks refuse to assist and therefore the mom and pop stores on main street may fail, through no fault of their own. So many small retailers are desperate to clear the indebtedness they suffered as a result of the economic downturn and the SBA loan program is their final opportunity.
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should have known thats what would happen with these loans.
ReplyDeleteSmall business people have loans secured with all of their personal assets. The banksters want them to default so they can grab those assets at fire sale prices. My great grand parents lost their farm in the 30's with the same tactics. Th ealrge banks should be banned and only locally owned cooperative community banks allowed to exist.
ReplyDeleteIt's interesting that US Bancorp utilized over $6 billion in taxpayer funded TARP loans but yet I as a small business owner now can't utilize the ARC loan program because my bank, US Bank, won't participate in the program.
ReplyDeleteI'm beginning to think the FED should refuse the payback of the TARP funds by US Bancorp so that they continue to be overtly regulated until they start playing ball!
Also, I believe TARP banks that aren't participating in these loans should be fined monthly to fund additional ARC loans as well.