Will Anyone Be Saved by the SBA's New ARC?

Just a few days ago I wrote another article for Entrepreneur Magazine which was picked-up by Reuters and and several other publications. See the entire article here http://entrepreneur.com/money/financing/article202382.html
It references the new America's Recovery Capital (ARC)loan program. The ARC loan is a $35,000, interest-free, deferred-payment loan, fully guaranteed by the Small Business Administration and available to established, viable, for-profit small businesses suffering "immediate financial hardship." This program is meant to be a savior for small businesses in touble but it seems to be nothing more than a publicity stunt by the current administration. There are 30 million small businesses in this country yet only 10,000 loans available. Huh?

I spoke to several of the supposed "participating banks" and they are quite nervous about the fact that they will be required to issue funds without receiving any of the loans' principle from the SBA for a full year. In addition, the SBA is offering a lower interest rate than other loan programs.

The Coleman Report, a newsletter for banks, states that "the ARC loan program is already being positioned to be a failure, and lenders are going to be the key players behind that failure." Even the SBA says it expects ARC loans to default at a higher rate than its other programs.

Is this the best our government can do to help small businesses to survive in this difficult time? As America's small businesses continue to "take on water," the jury is still out on whether the ARC loan program will be a lifeline to thousands of small businesses.

Why GM Failed

GM is bankrupt. That's no suprise. They’ve been bankrupt since 2006! They just avoided filing through creative financing like bonds, bailouts and banking relationships. Any other company would have long ago disappeared.

GM like many companies large or small made several massive blunders:
1. Lack of Market Touch. They lost touch with their target audience. They failed to make vehicles that appealed to their core consumers. Their leadership were Harvard Finance gurus who knew NOTHING of the automotive business.
2. Uncompetitive Product. When compared with their biggest rival, Toyota, their cars are uncompetitive, poorly designed and poorly built. In the last 50 years their market share has dropped from 60% to less than 19%. They have been on their way down for a long time.
3. Wrong Focus. GM has been pulling profits from their finance group more than their vehicle sales for many years. Rather than focusing on product innovation, creative marketing or customer satisfaction they were immersed in sustaining the economic model.

This is an example of what can happen to a business when they fail to focus on their CORE BUSINESS! Lose touch with the customer, the product and the marketplace and it is only a matter of time before economics will catch-up with you.

Book Review - Chaotics: The Business of Managing and Marke ting in the Age of Turbulence

This book is very focused on today’s volatile business world, and I really enjoyed reading it. I recommend this book for the business owner who needs practical “fix it now” advice. The reader will gain so much insight just by reading chapter 2, as it covers topics I’m sure today’s business owner is struggling with. I.E. – resource allocation, across the board spending cuts, quick fixes to preserve cash flow, and reducing sales related expenses, etc.

I particularly found a passage in the book that rings true and reinforces my stance that who we are is more important than what we do. The authors state, “So a company’s internal and external behavior leaves a legacy that affects the stakeholder’s future mindsets and behavior toward the company. Often times this reveals the absence of the company’s authenticity, a quality that is becoming increasingly important to consumers.” Being authentic in your marketing and business operations in imperative in maintaining happy customers that return. I recommend this book.