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Loans for Businesses Suffering from Red Tide: A Closer Look

Dead fish lie on the beach on Sanibel Island.
Dead fish lie on the beach on Sanibel Island.

Last week, Governor Rick Scott declared a State of Emergency due to red tide, which activated the “Florida Small Business Emergency Bridge Loan Program.” It's a short-term, interest-free loan intended to help small businesses impacted by red tide and the Lake Okeechobee algal bloom, but they may come due before the red tide is even gone.

The loans are available to businesses with 2 or more employees, up to 100, and they max out at $50,000.

While it’s billed as an “interest-free loan” on the state’s website, that’s only if the entire loan is paid in full within 180 days (or about six months).

If not paid by then, the interest on the loan is 18 percent retroactive to day one. That means, on day 181,  a $50,000 dollar loan has $4,500 in interest tacked on, and the 18 percent interest continues to accrue from there.  Eighteen precent is the maximum allowable interest rate that can be charged in the state of Florida before it’s considered usury.

Payments on these loans go through the Florida First Capital Finance Corporation, which was set up and run by the state of Florida until 1997 when it became a private non-profit corporation.

While these short-term loans have a 180-day interest-free period, there is no foreseeable end to the red tide bloom that has persisted in Southwest Florida for almost a full year.

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