The America's Recovery Capital loan program is designed to help small-business owners pay down existing debt, not finance business expansion, Vierra said.

"You have to use it to rid yourself of debt," he said.

Although the limitations disappoint some business owners, the program provides a great way for small businesses to pay off high-interest credit cards, he said.

"You are freeing up cash to run the business," he said.

Banks making ARC loans disburse the loan amount to borrowers over six months or less. Then, the borrowers can delay payments for 12 more months before starting a five-year payoff schedule.

Wells Fargo Bank, Nevada State Bank and Nevada Commerce Bank offer ARC loans, but many banks do not.

"There aren't a lot of banks that are processing the ARC loans. There's not a lot of money to be made for the banks themselves," Vierra said. "This is a loss leader for them."

The government pays participating banks the prime rate, now 3.25 percent, according to a Wall Street Journal survey, plus 2 percent on ARC loans. The loans are 100 percent guaranteed by the SBA, but the cost of administering the program eats into the interest income.

"I don't think (bankers) look at this program to make money. Banks are really looking at this program as a way to help their clientele out," said Guy Chaffee, vice president and Small Business Administration relationship manager at Nevada State Bank.

Wells Fargo, which says it makes more SBA loans than any other bank, offers the product to customers and noncustomers.

Nevada State and Nevada Commerce offer ARC loans only to customers.

Nevada Commerce has received no applications, said Chief Executive Kathy Phillips. The bank has few business customers that are small enough to benefit from a loan as small as $35,000, she said.

But that's not true at Nevada State.

"We have had a lot of inquiries," Chaffee said.

And Wells Fargo has seen keen interest.

"We have gotten thousands of calls, and we have sent out thousands of applications," said Tom Burke, senior vice president of Wells Fargo Bank.

Small businesses "are very excited about the fact they are getting the opportunity to do it," Burke said.

Yet, many return incomplete applications for ARC loans, Burke said.

Applicants must provide more information than is required for a standard 7(a) SBA loan, Chaffee said.

Chaffee suggests applicants seek help from the business development center or the Senior Corps of Retired Executives, another partner of the SBA.

"In my opinion, it's a little bit tougher to qualify for," than SBA 7(a) loans, Chaffee said.

"Some (businesses) are apprehensive because of the mystique that SBA loans are so hard to do" but others are enthusiastic, Chaffee said.

SBA Administrator Karen Mills, who spoke in Las Vegas last week, described ARC loans as a way to help viable businesses stay afloat during the recession: "ARC is a bridge over troubled water."

The SBA has $255 million budgeted for ARC loans and expects to approve 10,000 ARC loans. The one-time program continues until the money is gone or until Sept. 30, 2010, whichever comes first.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.