Brokerages Get Financing Help

By Robert Freedman, Senior Editor, REALTOR® Magazine

Much of what NAR gets involved in at the federal level is high-profile, like protecting the mortgage interest deduction, but the association on a daily basis is involved in initiatives that fly below the radar yet pack a big punch.

A new loan program from the Small Business Administration is a case in point. Although the association didn’t have a hand in the introduction of ARC loans–the “ARC” stands for America’s Recovery Capital–it’s been engaging with SBA leadership on who should be eligible for these loans.

If you haven’t heard about these loans yet, it’s worth your time to check them out. I posed questions about these and other SBA loans to Scott Rinn, NAR’s senior policy analyst on business issues, and you might find what he said useful.

First, ARC loans are interest-free. You heard that right. They’re zero-percent interest loans and they’re fully guaranted by the federal government. You can make payments on a deferred schedule, too.

What can you use the money for? For starters, you can pay off your existing debt, up to $35,000 (that’s the maximum loan amount). That’s a tremendous deal, particularly if you have a lot of high-interest credit card debt you’re wrestling with. Imagine transferring debt at, say, 18 percent interest, to an interest-free, deferred payment loan.

There are limitations, of course. You can only transfer business-related credit card debt. So, the loans won’t help you on your personal finances.

Here’s a link to information on applying for an ARC loan.

SBA has improved its two flagship existing loan programs, too. These are called Section 7 (a) and Section 504 loans. Terms are more attractive now.

On the ARC loans, there’s some uncertainty whether independent contractors qualify as applicants. Some SBA offices have said yes, some have said no. NAR is seeking clarification on the question and is recommending that SBA provide a definitive yes. We’ll be communicating with you once we hear what SBA says.

[Editor’s note: NAR learned on August 10 that the loans are in fact available to individual practitioners. The SBA clarified that point in a letter to NAR President Charles McMillan.]

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at

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  1. The SBA ARC Loan program continues to be problematic for many struggling small businesses as this program has evolved in unexpected ways compared to what was touted when it was launched. The loan amount is too small to help many businesses (Ask Congress why they thought this would be enough). The amount of documentation is nearly the same as is needed for a $1million loan. And the biggest issue that borrowers are facing is finding a lender who will loan to them, which is based on the type of qualifying debt that applicant has. So even if a business is qualified, it is far from automatic that they get a loan. As the article intimates, banks are wary and the debt they “prefer” are the term loans, notes and capital equipment leases, because the borrower can’t draw back on them once the ARC Loan pays off that debt.

    My company, Business Borrowers Alliance, is continuing to contact the banks that have been named as participants to learn what their specific requirements are and most continue to only want to do ARC Loans for only their customers that specifically have loans at their bank.

    For more information, contact us at 866-944-3866 or

    Neal Gordon
    We provide direct assistance and help to businesses throughout the complete ARC Loan application process.

  2. The SBA ARC is too little too late. One of the determining factors they use to decide if you are a viable business or not is that you must show a profit for one of the last two years on your income tax return. MANY Real Estate Brokers have lost money for the last two years, but are very much viable businesses. This deal should have been offered last year.

  3. I contacted the Los Angeles SBA district office and they completely contradicted the assertion of this article. They insisted that real estate agents are not eligible for these loans. What do I do now?

  4. Can anyone think of a less worthy borrower than a flat broke Realtor in debt?

  5. LaWanda Haswell

    What happens to the real people that are trying to help the community and themselfs in this econmic disater we are in..

  6. LaWanda Haswell

    We as a nation are trying to over come. Countrys all around the world are risking there lives to come to America for the American Dream. I would like to know why we can’t have the have the opportunity to accomplished our Dreams in America for those who have the the drive to to make the dream a reality,an maybe not the credit score or the money to to build a new foundation to start.

  7. LaWanda Haswell

    I am a license Realtor and License Cosmetoligist in two states why is it so hard to get a loan or finacial assitance from bank or the gov. after the big bailout the gov have given over billions to banks

  8. 11/02/09

    I acted on the information NAR provided regarding SBA Loans being available to real estate agents. Last week, after submitting a SBA loan application, I received word from my bank that I do not qualify for an SBA Section 7a Loan. The reason: as a real estate agent I am not a business. The bank, Sandy Spring, offered a home equity loan, instead.

    I wanted to make NAR aware of the above. Using a portion of my pension income to finance my real estate business is insufficient for where I want to take my business.

    Your advice will enable me to understand how optimistic I should be about the chance to acquire SBA financed working capital.