Buena Park consultant Mike Beard has tried unsuccessfully since July to get one of those deferred payment, interest-free federal loans promoted as a lifeline for struggling businesses.
The U.S. Small Business Administration announced with much fanfare in May the so-called ARC loans (short for American Recovery Capital) of up to $35,000 specifically for previously profitable small businesses that are struggling financially because of the recession. Click here to read a previous story.
The program is one of the few targeting small businesses in the federal economic stimulus efforts. Small businesses account for more than half the nation’s jobs and more than half the gross domestic product.
Beard, who has owned Value Based Project Management LLC since 2003 and self-employed since 2009, says his business certainly qualifies, but has been told the “initial response” (after 4 months) “would not be favorable” based on his personal credit history.
“If my company is negatively impacted by the negative economy for the past two years, caused by the greed of financial companies and banks, and I run a small consulting business then it stands to reason that the downturn is going to hurt my personal credit,” Beard wrote in a Nov. 2 letter to President Obama, the SBA, JP Morgan Chase Bank, 60 Minutes, Business Week magazine and the Orange County Register.
He says work has been tough to come by for two years and he would use the loan proceeds to pay off two business credit cards, thereby deferring the $700 monthly payments for up to a year.
Beard says he’s no fly-by-night flake. He’s president of the Association of Professional Consultants of Orange County.
The ARC loan web site states:
“SBA’s America’s Recovery Capital Loan Program can provide up to $35,000 in short-term relief for viable small businesses facing immediate financial hardship to help ride out the current uncertain economic times and return to profitability.”
Despite tens of thousands of applications from small businesses, only 3,577 ARC loans averaging $32,000, have been made nationwide. Thirty have been made to businesses in the Santa Ana district covering Orange, Riverside and San Bernardino counties.
Beard says he first applied to Washington Mutual, which was taken over in September by JP Morgan Chase, which has made four ARC loans in the Santa Ana district.
Alex Hernandez, the Chase banker handling Beard’s application, said he is not authorized to discuss it and referred a request for bank comment to regional officials.
Beard says the bank in October asked him for documentation that he had already submitted to Washington Mutual, and dated his initial application Sept. 25. Beard called the SBA and found out his initial application had not been submitted to the agency.
Rachel Baranick of the SBA’s Santa Ana office, says, ” I spoke to him at length and referred him to the financial committee at SCORE (volunteer business counseling organization). We are hoping he will be able to get a loan perhaps with another bank.”
Other economy stories…
- Private employers cut 203,000 jobs in October
- Business owners tap personal assets to survive
- O.C. small-firm bankruptcy filings 5th highest in U.S.
- O.C. new-business filings drop again in October
- O.C. business sales drop 54% in October
- Cal small-business job share dropped in ‘08
- State unemployment fund projects a $27.3 billion deficit
- Unemployment extension vote may come Wednesday
- 1.4 million California workers make due with part-time
Other small business stories…
