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Hello JA Customer,
In order not to be charged "imputed" interest by the IRS, you should always charge at least the Applicable Federal Rate (AFR) for interest. That rate changes each month and varies depending on the term of the loan.
A loan with a maturity of more than 3 years but less than 9 years is considered a mid-term loan. For mid-terms loans originating in the month of September 2010, the AFR is 1.92% for monthly payments. So if you plan to charge 5%, you have more than covered what you need to charge for the IRS to consider this rate reasonable.
I am giving you a link below to the AFR rates published so far for the 2010 tax year.
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