Snowe Seeks Repeal of ARC Loans
Dec 7th, 2009 | By Dawn Rivers Baker | Category: Politics & PolicyHere’s an almost unheard-of concept: if a government program isn’t working, how about turning it off and returning the unused portion of its budget to the Department of the Treasury? It’s the kind of thing that might fall under the category of “careful stewardship of taxpayer dollars” and it almost never happens. But that is what Senator Olympia Snowe (R-ME), Ranking Member of the Committee on Small Business and Entrepreneurship, has proposed with a bill, introduced last month, that would repeal the ARC Loan program. The bill (S. 2777) was introduced last month by Ranking Member Snowe for the relatively simple reason that it seems to represent a well-meant effort that could blow up in everybody’s face.
American Recovery Capital, or ARC, loans were created by the American Recovery and Reinvestment Act. They were designed to be a sort of bridge loan for small business owners faced with no access to capital and declining sales revenues, who were having trouble meeting existing obligations. Evidently, the program has been plagued by problems since day one and the White House Office of Management and Budget recently estimated that 60% of ARC borrowers may default on their loans, based on the statutory underwriting standards for the program. If lawmakers approve the measure, it would return about $120 million to the Treasury. Current ARC borrowers would be unaffected. The bill has been referred to the Committee on Small Business and Entrepreneurship for markup. It currently has no other sponsors.
