Bailouts aren’t just for big banks and auto manufacturers anymore.

For the first time, small businesses can receive money through America’s Recovery Capital. The loans offer exceptional terms: no collateral is required and no interest is charged.

The loans could provide a lifeline to family businesses trying to stay afloat in the recession.

“It’s very tough,” said Rebecca Evans, director of the Small Business & Technology Development Center in St. Joseph.

She has talked to business owners facing cash shortages they’ve never experienced before.

“Even businesses that have been around for a decade or more are starting to struggle,” Ms. Evans said. “This is exactly the loan they need.”

At a maximum of $35,000, the loans are targeted toward small operators. In this tight credit market, smaller loans are harder to obtain, Ms. Evans said.

“It’s difficult to get money from a bank unless your business is in a very solid industry,” she said.

Not only are the loans from the Small Business Administration interest-free for five years, but the borrower also has a year before they have to start repaying the principal.

Ted Allison, president of the St. Joseph Area Chamber of Commerce, testified before Congress earlier this year, urging some of the stimulus funds be directed toward small business. He said he’s excited about the new program.

“This does look like it’s geared toward the very smallest of small businesses, which is where we need help the most,” he said.

The program was introduced this week and applications are not available yet. Money will be available in mid-June. The loans are made through private lenders and are 100 percent guaranteed by the government.

For more information, contact Ms. Evans at 364-4105 or evanssbdc@saintjoseph.com.

Susan Mires can be reached

at susanm@npgco.com.