As part of the federal government's recently approved economic
stimulus package, the U.S. Small Business Administration (SBA) was
charged with creating the Business Stabilization Program.
According to the stimulus bill, the program calls for providing
small businesses loans of up to $35,000, essentially interest-free.
The government intends for the money to be used to pay down
existing debt resulting from bank-issued loans.
If a small business receives a stabilization loan, the money can be
used to make payments on pre-existing loans for up to six months
and stabilization loan repayment will not be due for a year
following disbursement of funds (though it must be fully repayed
within five years).
According to the guidelines provided in the bill, banks will
issue the loans to small businesses and the SBA will guarantee all
loans 100 percent. If a small business defaults on a stabilization
loan, the SBA will pay the bank the outstanding amount. The SBA
also will subsidize any interest incurred...
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