Guest Column: Investing in Missouri: The Missouri Linked Deposit Program
As a state it is critical we are always looking for ways to invest in human capital to build our infrastructure. These investments are the focus of my administration. We do this because, ultimately, doing so in a strategic, targeted and consistent fashion can produce big returns for Missouri.
As part of this goal to invest in our state, I am pleased to announce increased access for Missouri small businesses, employers creating and retaining jobs, farms, local governments and those deploying green technology to low-interest loans through the Missouri Linked Deposit Program. The Missouri Linked Deposit Program, which I administer, has $720 million in low-interest loans available. This program reduces the interest rate on loans for eligible applicants who have applied for a loan through a qualified lender. Invest in Missouri, legislation I developed to enact this expansion, was signed by Gov. Nixon and went into effect Aug. 28. Borrowers using the Missouri Linked Deposit Program will reduce their interest costs by about 30 percent.
This legislation was about creating and retaining Missouri jobs and reinvesting in our communities. Not only does it help get Missourians back to work, but it also puts in place a tool for investing in projects that invest in human capital and that move our 21st-century economy forward.
The Missouri Linked Deposit Program was created in 1985. Since then, small businesses and family farms have used these loans to save thousands of dollars of interest on their loans, which can be as large as several million dollars. With the passage of Invest in Missouri, the low-interest loans are now available to businesses with less than 100 employees, farms of any size, local governments, companies creating and retaining jobs and businesses and individuals using green technology to create energy.
As an example of how the program works, the normal loan rate for a small business that applies for a five-year loan might be 7 percent. If that small business applies and receives approval for a Missouri Linked Deposit Program loan, the loan rate would be lowered to approximately 5 percent. Over the life of that five-year loan, a borrower of a $500,000 loan would receive more than $32,000 in debt service savings by using the Missouri Linked Deposit Program.
The lender is willing to provide that reduced rate to the borrower because I agree to place a certificate of deposit with the lender at a reduced interest rate. Again, I do this because of the increased economic activity generated by the capital investment, which invests in communities to help create and retain Missouri jobs.
It is important to remember the Missouri Linked Deposit Program is not a grant or loan guarantee program. Because I take on no default risk for the underlying loan, the applicant must still qualify for the loan under the lender’s credit criteria. The maximum term for a Missouri Linked Deposit Program loan is five years, and the Missouri Linked Deposit Program loan must be from a qualifying Missouri lender such as a bank, credit union or farm credit services office with a branch in Missouri.
Missouri small businesses, farms, local governments and individuals interested in the Missouri Linked Deposit Program can go online to www.treasurer.mo.gov/LinkedDeposit or call (573) 751-2372. A list of participating lenders is also available on the Web site.
Missouri Linked Deposit Program
- www.treasurer.mo.gov/LinkedDeposit
- Low-interest loans for small businesses, green technology and farms
- Savings of 30 percent on the loan interest
- Also available for local governments