With the small business loan plan being proposed, I am again seeing people claim grants are definitely better than loans. You cannot make this claim as a fact, it depends on the loan details. And these are good loan details!

Let me give a numerical example. Say a small business has a $250,000 five year loan at 7.5% interest.

Would you rather have a $250,000 20 year loan at 1% or a $25,000 cash grant? The cash grant people seem to think the loan can't help, but let's do the math....

Monthly interest payments on that existing loan are $5,010. If they can refinance into 20 year 1%, payment fall to $1,150. Meaning they save $3,860 in CASH EVERY SINGLE MONTH. After one year, they have saved $46,320. Which is obviously far more valuable than the grant.

But this lowers their costs for the entire next five years! By the end of the five years, it will have saved the business $231,600 in debt payment. This improves their profitability for years, giving them incentive to stick out short-run problems. Unlike grants!

Folks I am begging you, please do not say "grants are better than loans". You cannot make this generalization, and the grants being proposed are good. If you want to make them better, argue for lower rates, longer amortization, and broader availability.