More Interest in Lower-Interest Loans

April 6th, 2012

Missouri’s Linked Deposit Program can lower rates.
By David Charles Chinnery as printed in the April issue of Thinking Bigger Business Magazine

Across the country, state and local governments are eager to offer economic incentives that will help create new jobs. Missouri, though, is taking the lead with its Linked Deposit Program, which partners with lending institutions to offer low-interest loans to small businesses.
By reducing interest rates on certain loans, qualified lenders in Missouri can work with Missouri-based small business owners in finding additional capital to grow their businesses. The program, which is overseen by Missouri State Treasurer Clint Zweifel, allows lenders to lower the interest rate to borrowers by about 2 to 3 percent in many cases.

There is $720 million worth of lending power in the program. Zweifel and his staff continue to make enhancements to the program so that more Missouri businesses can benefit, including raising the eligibility limit from 25 to 99 full-time employees.

Linked Deposit Eligibility

The Missouri Linked Deposit Program requires that a small business be headquartered in Missouri, maintain operations in the state and transact business here. The program is limited to for-profit organizations with fewer than 100 full-time employees.

As with most state programs of this nature, the business must not owe any unpaid taxes to any city, state or county entity in Missouri.

Loans That Grow Business

The most attractive feature of the Missouri Linked Deposit Program is that, at its core, the program enables businesses to sustain, grow and add jobs. Unlike other, more restrictive programs around the country, the Missouri program’s loan usage is broad.

Small business can use loan proceeds for buying land and buildings; costs associated with renovations, repairs or maintenance of equipment; purchasing inventory; professional fees; and even rent, utilities, insurance or taxes.

Preferred Lending Partners

Although many lending institutions can participate in the Missouri Linked Deposit Program, the treasurer’s office has designated approximately 22 lenders as preferred lending partners. Preferred lenders have multiple loans under the program and are well-versed in the loan eligibility requirements and application process.

For both lenders and loan applicants, the process is fairly simple, with online applications readily available at the treasurer’s website. Small businesses should first consult with a lending institution familiar with the program. Eligibility requirements reviewed in advance can greatly enhance the process and likelihood of loan approval.

Good Business Sense

The Missouri Linked Deposit Program is not a government bailout or unrestricted incentive for small businesses. It is a carefully crafted program that encourages both businesses and lenders to work closely and creatively in funding small business expansion and growth.

While job growth is a priority, the program also insists on sound business and lending practices.

Like many other loan incentive programs, the Missouri Linked Deposit Program requires collateralized loans.

The lending institutions must adhere to sound lending practices that support their own financial health and well-being. This means that credit history and ability to repay a loan are still the most important factors in determining loan eligibility.

Every Dollar Counts

For any business, large or small, every dollar saved in interest expense is a dollar that can be returned to the business for additional investment.

For large investments such as buildings, land and inventory, saving 2 to 3 percent through the Missouri Linked Deposit Program can be significant.

At a time when the economy is slowly rebounding, access to capital for small business is critical. The Missouri Linked Deposit Program can provide the capital boost business owners need to accelerate their growth.

David Charles Chinnery
 is president and CEO of Adams Dairy Bank, a preferred provider to the Missouri Linked Deposit Program. (816) 655-3333 //