It’s not every day someone offers you an interest-free loan. The U.S. Small Business Administration recently announced a program to do just that. As part of the stimulus package, SBA is launching America’s Recovery Capital loans June 15.
- Loans are up to $35,000.
- After you get the money, you have five years to repay.
- Not only is there no interest to be paid, but there are no SBA fees, either.
- Qualifying debt includes mortgages, lines of credit, credit cards, capital leases, and notes payable to vendors and others.
- To apply, find a bank that’s participating. The SBA guarantees the bank loan, but doesn’t dish out the money.
To qualify, you’ve got to jump through some hoops:
- You must have been in business two years.
- You must have financial statements showing you turned a profit in one of the last three years.
- You must be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval
One potential holdup on this is that some banks are leery about participating. In a CNN.Money story, Emily Maltby reports that SBA has yet to spell out details on how much it will pay the banks to make it worth their while, since no interest is being charged. Bankers also aren’t exactly sure about where to draw the line on what businesses are “viable” and which aren’t.
Maltby writes that SBA plans to tell the banks more by June 8.
For more information, visit the SBA website.
— Max Heine