America's Recovery Capital (ARC) loan program, authorized by February's stimulus bill, was launched this month after four months of planning. The program is designed for small business owners and loan money is intended to be used to pay interest and pay down principal on existing debt—however, the loans are supposed to be made and managed by SBA lenders and, so far, few have jumped on board.
According to an article in Fortune, one reason SBA lenders are hesitant to become involved is the interest rate for the loans. Though the loans are interest-free for borrowers, the SBA will pay lenders an interest rate of prime plus 2 percent. For the month of June, that's 5.25 percent—a lower interest rate than the SBA sets for its other loan programs.
Source:
Fortune: Lenders Hesitant On Small Biz Stimulus Loans
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