Sep 1, 2009 6 min read

A local small business owner got a sit-down with a U.S. Senator and the media to explain his frustration with a federal program designed to help small businesses, but that, in his opinion, has failed miserably.

The senator more than agreed.

U.S. Sen. Bill Nelson held a press conference Tuesday with North Fort Myers business owners Greg and Mary Ann Bullock, owners of Graphic Sign Solutions, to bring the issue to light.

The controversy surrounds the government’s $255-million American Recovery Capital (ARC) program, that was launched June 15 by the Small Business Administration. The goal was to help small businesses temporarily get through the current economic downturn by providing them with zero-interest, no-fee loans of up to $35,000.

The loans are 100 percent federally guaranteed, designed that the banks don’t need to be concerned with risk if the loans go sour.

“So far, only 65 loans have been made in the state of Florida,” said Sen. Nelson. “That is appalling.”

The senator said further that he believes banks are instead pushing high interest credit cards to small business owners instead – and said that much to President Barack Obama in a letter he sent Aug. 26.

Greg Bullock told of his steps to try to get one such loan, but of being turned down by numerous lenders. He said that included local Regions Bank, Wachovia, Sun Coast Federal Credit Union, and even trying to go through the Small Business Center at FGCU and the Small Business Administration.

He said he was even turned down by local Regions Bank where he had business accounts.

“They are like so many businesses all across America – they are having a very difficult time making financial ends meet and they are threatened with the prospect of having to close down,” said Sen. Nelson.

“When we passed the economic stimulus bill six months ago, one of the aspects was a whopping amount of money – $255-million – into the Small Business Administration to make 100 percent federal guaranteed loans to small businesses at no risk to the bank.”

The senator said so far, very few loans have been made.

“The problem is in setting up these loans is that the banks don’t want to make them in the first place, because banks can make a lot more money by making the small business owner borrow their money on their credit cards. And the big banks like Citibank and Bank of America that have been loaned so much money by the federal government – bail out money at $45-billion a piece – aren’t participating. That’s how much the federal government stepped up to help them and now they refuse to participate in these loans.

“That’s simply not right.”

Another problem is within the administration of setting up the loans, Nelson said, the criteria for getting one. “They are so stringent that very few businesses like his [Bullock’s] can qualify. They say they have to be in business for two years but one of those years has got to be profitable. We’re in the middle of a recession – they can’t be profitable. So Mr. Bullock is in a situation that he may need to shut down his business and you can imagine this – the stimulus money was to keep businesses in business. Let them start turning a profit and let them pay it back in five years.”

“Basically we’re looking at possibly closing the business because sales are down about 50 percent and that’s not due to lack of marketing or anything like that. People out there just don’t have the money to spend,” said Bullock.

His business provides signs of all kinds, anything you can put your identity on, real estate signs, electric signs, and business cards.

“Lee County has been one of the hardest hit in the country,” the senator said, with businesses having no extra income for many types of promotions.

The senator asked about the Bullock’ process in trying to get the loan, and how many times they were turned down. “It has to be at least a half a dozen. And the majority of the responses were first do all, they didn’t know about the program and second, once they checked, they said we don’t participate in the program,” said Bullock.

The criteria of showing the profit in the last few years was the deal-breaker, Bullock said.

“I have this all over the state of Florida,” said Sen. Nelson. That’s why he said he plans on campaigning until he is “blue in the face” on this issue.

He distributed his letter to President Obama to the media. In it, he urges the president to step in and exercise his authority to “develop an aggressive plan of action to increase participation in SBA loan programs by all TARP [Troubled Asset Relief Program] recipients.”

Those are first and foremost Bank of America and Citibank, said the senator.

Regions Bank was invited to respond to the issue. “While we can’t comment on specific customer relationships, Regions is an experienced SBA lender and the ARC loan, like all SBA loans, is governed by strict SBA guidelines for underwriting,” said Mel Campbell, spokesperson from Regions.

Gilbert Colon, Deputy District Director for the South Florida District Office of the Small Business Administration, said there have been some successes. “Activities as of Aug. 23 include that there has been 1,589 loans made across the country for $51.9-million. We have determined that 48 states have made loans, 520 lenders participating. These loans were done over a course of time since the beginning of the loans. The week of the 23rd, 226 loans were recorded.”

It took some momentum to get the program going, he said. “It began to trickle down, and now people have an idea how to do this. The bankers needed to be trained and learn the features of the program.”

Sen. Nelson said he encourages small business owners to go after the loans, and let him know what the outcome is. The senator said he specifically welcomes all contact with small businesses representatives that have no success in getting the loans.

You can call Senator Nelson’s office at his local office at 334-7760 or main office (202) 224-5274. You may also contact his office by mail, fax or web mail. His local address is Justice Center Annex Building, 2000 Main Street Suite 801, Ft Myers 33901. His Web site is billnelson.senate.gov.