Excellent comments, thanks. This blog post (copy and paste into your browser) does a good job explaining why ARC loans will not really work... http://www.businessmanagementdaily.com/articles/19397/1/Small-Business-Loans-from-President-Obamas-ARC-Program---Why-It-Doesnt-Really-Help/Page1.html This one talks about why ARC loans don't work for "real" business owners... http://www.businessmanagementdaily.com/articles/19483/1/Why-Small-Business-Loans-Dont-Work-for-Real-Small-Business-Owners/Page1.html More info at FlowFunding.com

AP INVESTIGATION: Main Street's soaring sour loans Buzz up!42 votes Send By FRANK BASS and RITA BEAMISH, Associated Press Writers Frank Bass And Rita Beamish, Associated Press Writers – 1 hr 25 mins ago(July 26, 2009) REDWOOD CITY, Calif. – As the effects of the economic collapse began pouring down Main Street, the government last year was left holding a record $2.1 billion in write-offs of small business loans it had guaranteed. Officials expect the number of defaults to rise as the nation continues to climb out of the recession. Records obtained under the federal Freedom of Information Act show the public is paying to offset bank losses on small business loans across the country, from a convenience store in the tiny Canadian border town of Houlton, Maine, to a graphic arts design company on the island of Hawaii, more than 5,000 miles away. Despite having loans written off, little companies such as Caffe Sportivo, an espresso shop and small gym in Redwood City, Calif., are barely scraping by. "I just couldn't make any payments. I was barely making rent or payroll," owner Chris Sakelarios said on a recent afternoon when her cafe stood empty except for two patrons who read as they sipped coffee. "The same as everyone else. We're in a hovering pattern." It's a sign that even as record profits re-emerge on Wall Street, thanks to massive government loans and guarantees for banks deemed too big to fail, the pain on Main Street is as profound as it's been in half a century. The companies that were not too big to fail are failing. Their plight is a shift from previous recessions when small business bounced back ahead of big employers, said Todd McCracken, president of the lobby group National Small Business Association. "This could be the first economic recovery we've seen in a long time that hits small business the hardest the longest," he said. The Small Business Administration purchased $2.1 billion in bad loans from lenders last year. Agency officials say it's likely that this year will see another high as the recession nears the two-year mark. "It's frustrating when (banks) are getting bailed out for bad decisions they made, that there isn't more assistance for the small business," said Eric Geedey, who manages Caffe Sportivo for Sakelarios. Sakelarios obtained a $20,000 SBA loan from Union Bank in late 2007 to start her business when the economic outlook was brighter on the affluent San Francisco Peninsula. Within a year, however, she was scraping by with the help of a landlord and vendors who let her adjust payments. She has reduced the hours of her seven employees and relies on her brother and a friend to help keep the doors open on weekends. The balance of the loan was written off in early January. In addition to being dogged by bad credit, the cafe will have to report the loan charge-off as taxable income, Geedey said. Sakelarios isn't the only recession victim and she won't be the last. SBA loan defaults generally occur in two stages. The first is when the bank decides it won't get its money back and asks the government for the guaranteed portion of the loan. In the second, the government decides it won't get any more collateral or money from the borrower. Years can elapse between the time that the borrower stops paying and the government writes off the loan. In 2008, for example, the government concluded it wouldn't be able to recover $1.3 billion in defaulted bank loans it had guaranteed. Many loans were part of a backlog, according to SBA officials. But an AP analysis found that the time between loan approvals and loan defaults is narrowing. According to the analysis: _More than $235 million in restaurant loans have been charged off since 2007. The 2,586 restaurant charge-offs make up the largest number of defaulted loans, according to the SBA. More than 150 loans made to Quiznos franchises — worth nearly $15.5 million — have been written off since 2007. _The Gulf Coast fishing industry, battered by two major hurricanes in 2005, has been hit especially hard. Half of the 10 cities with the highest industry-specific write-offs are in Biloxi, Miss.; New Orleans; Ocean Springs, Miss.; Lafayette, La.; and Abbeville, La. All told, the shellfish fishing industry had 45 loans charged off, at a total cost of $19.5 million. _The banks making the loans have also been hit hard by the recession. Bank of America Corp., which has received $52.5 billion in government aid, has had nearly 7,000 loans worth $238 million charged off since 2007. More than 660 loans worth $174 million have been charged off by CIT Group Inc., a major commercial lender forced to turn to bondholders in an effort to try to avoid bankruptcy protection after the government refused to save the company. JPMorgan Chase & Co., which repaid $25 billion in taxpayer loans last month, has written off nearly 2,300 loans worth $117 million. "I have never seen it as rough as it is right now," said Scott Hauge, president of Small Business California, a business advocacy group. Small businesses account for half of all private-sector workers and have created roughly half of the nation's jobs over the past decade. They received some help from the $787 billion federal stimulus package in February, including higher microlending amounts and federal loan guarantees. Congress also authorized the U.S. Treasury to purchase $15 billion in pooled loans to encourage lenders to provide money to small companies. The SBA recently announced it will guarantee short-term bank loans to help small businesses pay off existing bills. The White House has floated a proposal to take money from a $700 billion bailout of the financial system and provide small companies with working capital, allowing them to add inventory and employees. If it happens, the White House said, help might arrive by fall. That's too late for thousands of defunct companies with shuttered windows, disconnected phones and broken dreams. Diego Garcia's soccer supply store in the modest Northern California city of Richmond has shrunk to one small location after Garcia was forced to close his two larger stores last year. Garcia started the business after launching a youth program and soccer league in gang-ridden Richmond. He had turned away from his own gang lifestyle after being shot in the chest at age 18. Garcia expanded fast, never imagining how quickly his booming business would decline. When he couldn't pay up, his bank wrote off nearly all of his $45,000 loan. He lost rental property to foreclosure at the same time. "It's too much of a loss," he said. "We had to get loans to get bigger. Then everything went the opposite way." Eric Zarnikow, SBA's associate administrator for capital access, said the bad numbers probably will continue to rise as the agency receives charged-off loans in the future from defaults occurring now.

Neither Bank of America nor any other bank that wishes to stay in business, no matter how friendly to small-business that banks wants to be, is going to give out loans as readily as they used to, especially in a challenging climate. SEIU epitomizes the sentiment held by some, that union leaders are self-serving rather than servants of their members. SEIU is believed by many other union members to be an inferior union and they will, apparently, write anything for a buck. I'll repost what I've written in response to SEIU's nonsense before (their article: http://www.seiu.org/2009/06/us-chamber-of-commerce-stands-up-for-its-constituents-ken-lewis-and-bank-of-america.php): As a union member, International Association of Firefighters, as a well-rounded person with a degree in economics from a very well-espected university, with experience in business in the private sector and as an active investor, I can tell you that union leaders are no more altruistic than is management of corporations so I don't know how they figure they can comment on Ken Lewis/Bank of America. Our country can get along fine without the services of the SEIU. Can our country get along without the services of the financial industry? NO. The financial industry is necessary to raise money to fund everything from the paving of roads to innovation in medicine so that fat union leaders can get new medicine/medical procedures in order to live longer from someone else's hard work. Furthermore, union leaders are generally more full-of-it than corp management is since most union leaders are largely UNemployable in any other capacity. They must use all sorts of spin to keep their followers in-line. In other words, unions leaders are constantly fighting MERELY to keep the only well-paying job they can get while most corporate executives are fighting for many things. Keeping a job merely for a nice paycheck is not number one to them since most of them can get a decent job, working anywhere, in a day. By the way, the SEIU represents some firefighters and the SEIU is commonly considered among IAFF and SEIU firefighters that I know to be a union that is considerably inferior to the IAFF so don't take what they have to say too seriously. Just look how rabble-rousing the language is in this article. Hilarious. By the way, thanks to pot-stirrers like this one, Bank of America stock was driven down to a ridiculously low price of $2.58 from a 52 week high of about $40. This allowed me to buy BAC stock, and a lot of it, at less than $5. I've now almost TRIPLED my money in about 3 months and it will probably triple again within a couple of years. Investing in the future of America isn't that difficult if you put some time and thought into it, it's not only for "fat cats." Of course, it's probably a lot easier to just collect money by working in union management and lying to a captive audience of workers while you go out to lunch and dinner on their dimes.