Republican Sen. Olympia Snowe has introduced a bill to immediately end the American Recovery Capital loan program. The legislation would return $153 million in unspent ARC money to the Treasury.

The Maine senator says that the ARC program has been plagued by problems, most notably the high loan default rate.

New York Times financial blogger Robb Mandelbaum disagrees that the high default rate is the biggest problem with the ARC program. Mandelbaum writes:

“As Agenda readers know, the initiative has been flummoxed by its own design: Congress wrote the loan limits too small and the terms too generous for banks to profit from making the effort. Further, the impossible mandate of targeting struggling yet ‘viable’ businesses, coupled with Congress’s demand for rigorous accountability on stimulus spending … led inexorably to strict underwriting standards from the SBA Bankers, fearing they won’t be reimbursed for bad loans, have meanwhile adopted an even more cautious stance, disqualifying apparently worthy applicants.”

Snowe, the top-ranking Republican on the Small Business Committee, was a driving force behind the initial legislation, says Mandelbaum.

The House recently passed a bill that would extend the ARC loan program with a few tweaks, such as increasing loan limits and making the application process easier. It seems unlikely, however, that the bill will pass in the Senate.

President Barack Obama’s stimulus bill promises billions of dollars to get the economy back on track, but many small business owners are still struggling to understand how to get their share of the stimulus pie.

To encourage banks to fund small business loans, the Treasury Department plans to buy $15 billion worth of securitized SBA-backed loans using funds from the bank bailout program, Dawn Williams writes in the Nashville Examiner.

The SBA also created the American Recovery Capital loan program, which provides deferred-payment loans to small businesses unable to pay current debt. No-fee ARC loans are interest free. Click here to find out more.

Small businesses also can take advantage of a number of tax cuts and credits, Williams writes. Among other provisions, businesses that sell goods and services to the government, businesses that reduce debt and businesses that invest in new plants and equipment in 2009 are eligible for tax breaks.

Find out more at: http://usgovinfo.about.com/od/moneymatters/a/ecstimtaxes.htm.