The 31-year-old has not started a Premier League game yet this season, making just two substitute appearances in the top flight, while he has only made two other appearances in cup competitions.
Fulham manager Marco Silva worked with Soares at Sporting and has been keen to reunite with the defender at Craven Cottage.
Silva’s side are enjoying a fantastic season after promotion from the Championship, currently seventh in the Premier League and in contention for European football.
ESPN report that a deal has been agreed for Soares to move across London on a six-month loan with no option or obligation to buy in the summer.
The defender’s contract at Arsenal runs until 2024 and his future with the Gunners will be discussed at the end of the season.
The ESPN report states that Fulham will cover Soares’ wages in full, which are close to £100,000-a-week.
Soares first joined Arsenal on loan from Southampton in January 2020, making the move permanent that summer and going on to make 59 appearances for the club across all competitions.
With Ben White and Tomehiro Tomiyasu competing for the right-back slot and Kieran Tierney and Oleksandr Zinchenko battling it out for the left-back position, his chances have been more limited than ever this season.