Football Insider reports Villareal are planning a £30million loan-to-buy offer for the 21-year-old.
Arteta has given the "green light" for the deal to go ahead.
It is believed it will be a loan for a year with a permanent £30m transfer at the end of that.
Arteta is desperate to get shot of Guendouzi, with L'Equipe reporting that the Gunners recently contacted Lyon to put an offer on the table for Houssem Aouar.
Arsenal offered to include out-of-favour midfielder Guendouzi as part of the deal.
But the source states that the French club have rejected their proposal.