Legislation expanding the Missouri Linked Deposit Program, which provides low-interest loans to small businesses and farms, is headed to Gov. Jay Nixon for final approval.
The Missouri House of Representatives unanimously approved Senate Bill 542 - sponsored by Sen. David Pearce, R-Warrensburg - on Monday, according to a news release from the Missouri State Treasurer's Office. Newly elected State Treasurer Clint Zweifel championed the legislation expanding the program, which his office administers.
The Missouri Linked Deposit Program is designed to place state funds with community banks at below-market interest rates so those banks can loan the money to borrowers at a reduced rate - typically a discount of 2 percent to 3 percent. Only about a third of the program's $720 million statutory annual cap is reached each year.
Funds allocated for the loan program are as follows:
• Agriculture, $330 million
• Job enhancement, $220 million
• Small businesses, $110 million
• Multifamily housing, $20 million
• Alternative energy, approved case-by-case
Additionally, the legislation will phase out - over five years - the statutory interest rate cap that ties state deposits to the return of short-term U.S. Treasury securities, according to the release. That yield has been as low as 0.2 percent recently. Removing the cap will allow the state to receive a yield closer to rates offered by banks, according to the release. The market rate is currently about 1.5 percent.
The legislation, which also allows for local government assistance linked deposits, was supported by the Missouri Bankers Association and the Missouri Independent Bankers Association.
"The passage of Invest in Missouri gives the state a strategic tool as we fight to turn the economy around," Zweifel said in the release. "... This legislation costs Missourians nothing; in fact, it will return $10 (million) to $15 million per year on taxpayers' investments when fully phased in."
