Proceeds from a loan are anything an individual or their spouse receives from someone that they agree to pay for at a later date. The applicant/participant or their spouse can make the agreement with a lending institution such as a bank, or another individual. The loan agreement must be enforceable under State law.
A loan is bona fide if:
- it is supported by a written agreement to repay within a specified time or received from an individual or establishment engaged in the business of making loans; or
- there is an obligation to repay (with or without interest); or
- there is a pledge of real or personal property or anticipated income with the intent to repay when funds become available or future anticipated income is received; or
- there is a written timetable and plan for repayment.
If the loan is bona fide, the value of the cash or item the applicant/participant or their spouse receives is not income. However, any borrowed funds not spent in the month received, will count as an available resource the next month.